The moratorium period in health insurance refers to a fixed period during which an insurer cannot reject claims based on non-disclosure or misrepresentation of pre-existing conditions, unless there is proven fraud. It is designed to protect policyholders from claim denials after they have maintained their policy for a certain number of years.

With recent regulatory changes by the IRDAI (Insurance Regulatory and Development Authority of India), the moratorium period has been reduced from eight years to five years, benefiting policyholders with greater claim security.

This guide will cover everything you need to know about the moratorium period, how it affects policyholders, and how it applies to porting a health insurance policy from one insurer to another.

1. What is the Moratorium Period in Health Insurance?

The moratorium period is a specific duration after which an insurer cannot deny a claim on the grounds of non-disclosure or misrepresentation of pre-existing conditions, provided that no fraudulent intent was involved.

Key Features of the Moratorium Period:

• Once the moratorium period is completed, the insurer cannot reject a claim due to unintentional errors or omissions in medical history disclosure.
• The moratorium period applies to all health insurance policies in India.
• As per IRDAI’s 2024 amendment, the moratorium period has been reduced from eight years to five years.
• This rule applies to both individual and family floater health insurance plans.

Why Was the Moratorium Period Introduced?

The moratorium period was introduced to:

1. Ensure policyholders are not unfairly penalized for minor, unintentional errors in disclosure at the time of policy purchase.
2. Encourage long-term retention of health insurance policies, as claim rejections after the moratorium period are minimal.
3. Provide transparency and security to policyholders, ensuring that insurers cannot misuse non-disclosure as a reason for claim rejection after a specific duration.

2. How Does the Moratorium Period Impact Health Insurance Claims?

During the moratorium period:

• Claims can be rejected if the insurer finds that a pre-existing condition was not disclosed at the time of policy purchase.
• Claims will be honored for any health condition that is covered under the policy and was not related to misrepresentation or non-disclosure.

After the moratorium period is completed:

• The insurer cannot reject a claim on the basis of past non-disclosure or misrepresentation unless it is proven that the policyholder committed fraud.
• Pre-existing conditions that were not disclosed will still be covered, ensuring continued financial protection.

Example:

A person purchases a health insurance policy at age 35 but forgets to disclose a minor pre-existing condition like hypertension. If they need heart surgery at age 41 (after six years of policy continuation), the insurer cannot reject the claim based on non-disclosure, as the moratorium period of five years has been completed.

3. How Does the Moratorium Period Apply to Portability?

Health insurance portability allows a policyholder to transfer their existing health insurance policy from one insurer to another without losing benefits such as waiting period credit for pre-existing conditions.

Does the Moratorium Period Carry Over When You Port a Policy?

• Ideally, the moratorium period should continue from the old policy to the new one, meaning the years completed under the first insurer should count towards the new insurer’s moratorium period.
• However, IRDAI’s guidelines do not explicitly state whether insurers must carry forward the moratorium period after portability.
• It is recommended that policyholders confirm this with the new insurer before porting their policy.

Steps to Ensure Moratorium Benefits While Porting a Policy:

1. Check with the new insurer whether they honor the moratorium period already completed with the old insurer.
2. Submit proof of continuous coverage from the previous insurer.
3. Ensure all health declarations are correctly filled out in the portability application.
4. Request a written confirmation from the new insurer regarding the treatment of the moratorium period.

4. Difference Between Moratorium Period and Waiting Period in Health Insurance

Waiting Period:

• The waiting period applies to specific health conditions or pre-existing diseases before coverage starts.
• Waiting periods can range from 30 days (general illnesses) to 2-4 years (pre-existing conditions, maternity benefits, critical illnesses, etc.).
• If a policyholder ports their policy, the waiting period credit is carried forward to the new insurer.

Moratorium Period:

• The moratorium period applies to all claims, not just pre-existing conditions.
• It determines when the insurer can no longer reject claims due to past non-disclosure or misrepresentation.
• It is not the same as the waiting period and may or may not be carried forward after portability, depending on the insurer’s policy.

5. Benefits of the Moratorium Period for Policyholders

1. Greater Claim Security
• After completing the moratorium period, the insurer cannot reject claims due to non-disclosure of past medical history.
2. Long-Term Protection
• Policyholders who maintain continuous health insurance for five years can be assured of claim approval without disputes.
3. Encourages Early Enrollment
• Insurers are less likely to scrutinize past medical history after the moratorium period, ensuring coverage even if minor conditions were not disclosed at the time of purchase.
4. Stronger Consumer Rights
• The IRDAI’s reduction of the moratorium period from eight to five years gives policyholders faster protection against claim rejections.

6. Things to Check Before Buying or Porting a Policy with the Moratorium Period

1. Moratorium Period Clause in the Policy Document
• Read the fine print to confirm how the insurer applies the moratorium period and if any additional conditions exist.
2. Portability Terms
• If you are porting a policy, confirm whether the new insurer will honor the moratorium period already completed with the previous insurer.
3. Waiting Periods for Pre-Existing Conditions
• The moratorium period does not replace waiting periods for pre-existing diseases.
• Ensure that waiting period benefits from the old insurer are transferred correctly when porting.
4. Fraud and Misrepresentation Clause
• Even after the moratorium period, claims can still be denied if fraud is proven.

7. Final Thoughts: Why Understanding the Moratorium Period is Important

The moratorium period is a major consumer protection feature in health insurance, ensuring that insurers cannot deny claims based on past non-disclosure after the policy has been active for five years.

For policyholders who port their insurance to a new provider, the moratorium period may or may not carry forward, so it is essential to verify this with the new insurer before porting.

By staying informed and understanding how the moratorium period works, policyholders can make better decisions about buying, maintaining, or porting their health insurance policy, ensuring continuous protection and financial security.