With insurers now listing old ailments as permanent exclusions, it may be better to stay with existing insurers; group insurance plans could also be looked at.
When Mumbai-based Pravin Kurien bought Oriental Insurance Company's Happy Family Floater Policy this August, he was in for a rude shock. His final policy document listed his parents' pre-existing diseases (PEDs) as permanent exclusions.
In another case, Apollo Munich Health was ready to offer Deepika Sharma and her two daughters (both under 10), cover under the Easy Health Floater plan, but with conditions attached. Since Deepika suffered from Allergic Bronchitis, this and other related outcomes were marked as permanent exclusions for her as well as her daughters.
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In Kurien's case, he had little choice but to accept the offer, since it wasn't easy to get insurance for his parents, aged 60 and 57. Sharma, however, looked around and found better options.
Brokers say, considering the higher risk associated with Kurien's parents, companies may be expected to attach certain conditions, but by extending such exclusions for young policyholders like Sharma's daughters, insurers are going overboard. A number of insurers, especially private ones, are using their discretion and turning PEDs, or even relatively new lines of treatment, as permanent exclusions.
"Chronic ailments like cardiac ailments, hypertension, diabetes, knee surgeries and all related complications that arise out of these ailments are being permanently excluded by many insurance companies," says Mahavir Chopra, head, e-business, medimange.com
On the other hand, customers who remain with the same insurers have their PEDs covered after a period of four years. With portability in place from October1, customers are allowed to carry over their PEDs to their new insurers. So, if you port your insurance cover after three years, the new insurer will have to cover your PEDs after one year, that is, the fourth year of the PED.
But, by turning PEDs into permanent exclusions, insurers may be taking the roundabout way to subvert paying for PED claims. They argue that the Insurance Regulatory Authority Development (Irda) allows them to take a final call on the risks they are willing to underwrite.
"While remaining true to its approved underwriting guidelines, every customer proposal we get is assessed separately on the basis of medical checks, wherever applicable. So, no two policies will be alike in terms of underwriting risks," says Apollo Munich Health Insurance Chief Executive Officer Antony Jacob.
Insurers say their underwriting norms will remain the same for both - first-time customers and those looking at porting from another insurer. But industry experts feel portability will add to the problem. While companies cannot reject claims made on PEDs by their existing customers, they are likely to take a tough stand for new applicants.
"Customers not happy with their current insurer and looking at porting to another may end up with policies that have conditions like extra loading or, worse, a permanent exclusion of an existing disease. Utmost care must be taken before accepting portability terms from the new insurer," Chopra adds.
But, what could mislead customers is that, a detailed list of permanent exclusions may not be mentioned in the policy wording document (contract) that Irda approves, though it is mentioned in the final policy. While some companies, like Apollo Munich, send out letters mentioning the loading and conditions, others are said to inform customers about permanent exclusions only over the phone.
Customers need to read the fine print. Under portability, a customer needs to approach a new insurer 45 days before his policy renewal date. He would know the status of his application along with the details of the offer within the next 30 days. That gives him a 15-day period to decide on the policy.
"Customers should compare the cover the new insurer is offering with his existing cover. He may find that he is better off remaining with his existing insurer rather than switching over,," says Vantage Insurance Brokers CEO Arvind Laddha.
As Jacob mentions, customers who opt for a group plan offered by their employers will have all PEDs covered from day one. Almost all group plans cover employees and their spouse and children. Some may offer a co-pay facility while covering the employees/parents.