IRDAI brings New Health Insurance Rules w.e.f Oct 1: Benefits for Policyholders

The Insurance Regulatory and Development Authority of India (IRDAI) has released a master circular to help policyholders better understand their rights.

Many people have life and health insurance policies but often don’t fully grasp the terms and conditions, leading to issues when they need to use these policies.

Here’s what you should know from the circular:

1. 30-Day Free-Look Period

Life insurance companies are required to provide a 30-day free-look period. During this time, policyholders can thoroughly review the policy terms and conditions.

If they are not satisfied, they have the right to cancel the policy.

Previously, this period was only 15 days, but now it’s extended to ensure policyholders have ample time to make informed decisions.

2. Death Claim Settlement Timeline

If a policyholder passes away, it’s crucial to know how long the insurance company can take to settle the death claim.

For cases where no investigation is needed, the claim must be settled within 15 days after the process begins.

If an investigation is required, the company still has to settle within 15 days of starting the process.

3. Interest on Delayed Claim Settlement

If a policyholder wants to surrender a policy or withdraw money, the insurance company must complete the process within 7 days of the request.

Similarly, payments for maturity or survival benefits should be made on the due date.

If there’s a delay, the insurance company must pay interest at the bank rate plus 2% for the delay period.

4. Nomination Requirement

When purchasing an insurance policy, it’s mandatory to nominate someone who will receive the insurance cover amount in case of the policyholder’s death.

The policyholder can nominate one or more persons and even specify how much of the sum assured each nominee will receive.

5. Health Insurance Claim Settlement

For health insurance, if a cashless authorization request is made, the insurance company must approve it within one hour.

If a patient is being discharged from the hospital, the company must approve the request within three hours.

The master circular emphasizes that patients should not have to wait for discharge due to delays in authorization from the insurance company.

The Insurance Regulatory and Development Authority of India (IRDAI) has implemented several new rules aimed at benefiting policyholders, covering all types of insurance including life, health, and general policies.

These new rules for health insurance came into effect from April 1, with a deadline for full implementation by September 30.

The changes include quicker approvals for cashless claims and discharge authorizations.

Quick Cashless Claims and Discharge Approvals

Under the new rules, insurance companies must approve cashless claims within one hour of receiving the request.

The final authorization for discharge must be granted within three hours of receiving the discharge notice.

These time-bound approvals aim to streamline the claims process and reduce delays for policyholders.

Changes Leading to Increased Premiums

Due to these new rules, health insurance premiums have increased by 10-15%.

Anand Roy, MD and CEO of Star Health Insurance, explains that while the IRDAI’s master circular aims to clarify policy coverage and waiting periods, medical inflation of 14-15% has also contributed to the premium rise.

Reduced Moratorium Period on Claims

One significant change is the reduction of the moratorium period for health insurance claims from 8 years to 5 years.

After maintaining a health insurance policy for 60 months, the insurer cannot deny a claim on grounds of non-disclosure or misrepresentation, except in cases of proven fraud.

Limits on Claim Rejections

Insurance companies are now restricted from rejecting claims after the policy has been active for five years unless there is proven fraud.

For example, if a policyholder did not disclose a pre-existing condition like cancer, it would be considered fraud.

However, if a policyholder feels their claim was wrongly rejected, they can file a complaint with the Ombudsman Office.

Discount on Premium for No Claims Made

If no claim is made in a year, insurers usually increase the sum insured without extra cost.

Now, IRDAI mandates that insurers offer policyholders a choice between increasing their sum insured or getting a discount on the premium during renewal.

This provides relief for those struggling with rising premium costs.

Policy Cancellation Anytime with Refund Option

Policyholders can now cancel their health insurance policy at any time during the year by giving a 7-day notice to the insurer, who must then refund the premium for the remaining period.

IRDAI also requires insurers to offer products catering to all age groups, ensuring more inclusive coverage options.

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