Why are medical health insurance insurance policies offered by banks, or the likes of Paytm and PhonePe, less expensive? How do these plans work? Are there any potential drawbacks one ought to pay attention to?
—Name withheld on request
Health insurance coverage supplied by banks or cell apps are sometimes cheaper as a result of they’re sometimes group plans. These plans can be found completely to members of a particular group, reminiscent of checking account holders or KYC-approved app customers.
While these plans could seem enticing on account of their decrease value, it is very important pay attention to their limitations and potential drawbacks:
- Coverage tied to group membership: Group insurance coverage insurance policies are legitimate solely so long as you stay a part of the group. For instance, in the event you shut your checking account or cease utilizing the app, your protection will finish. This means your insurance coverage is carefully tied to your continued membership within the group.
- Limited-term contract: These insurance policies are usually issued for a one-year time period. At the tip of the 12 months, the insurer could assessment the coverage based mostly on the claims expertise and alter the phrases or premiums. This means your protection and prices might change yearly.
- Risk of cancellation: There’s all the time a threat that the coverage could possibly be discontinued if the insurer or the group decides to withdraw it. In such instances, you could be left with out protection and could possibly be supplied another retail coverage with probably greater prices and totally different phrases.
- Lack of management: Since the phrases of a gaggle plan are negotiated by the group proprietor (such because the financial institution or app), you don’t have any say within the coverage particulars. If the group decides to chop prices, you would possibly end up with diminished advantages or greater premiums, which can not fit your wants.
In abstract, whereas group plans could seem to be a lovely choice on account of their decrease value, it’s essential to concentrate on their limitations and dangers. Ensure you perceive the complete implications earlier than committing to a plan.
I heard medical health insurance firms can not reject a declare if a policyholder continues paying premium for five years. I imagine it’s known as moratorium interval. Why do claims nonetheless get rejected?
The moratorium interval for medical health insurance insurance policies in India, which was diminished to 60 months in April 2024, performs a vital position in declare acceptance. During this era, insurers can not deny a declare based mostly on non-disclosure or incorrect data, besides in instances the place fraud is confirmed. Meaning, insurers can nonetheless deny a declare if they’ll show fraud.
What constitutes fraud? Well, underneath the Indian Contract Act of 1872, fraud is outlined as any act meant to deceive or induce somebody right into a contract. This contains:
- Making a false assertion as a reality
- Concealing a cloth reality recognized to the occasion
- Making a promise with out intending to maintain it
- Any different misleading act meant for private achieve
In essence, fraud includes deliberately deceiving somebody for private profit.
So, for an insurer to reject a declare after the moratorium interval, they might want to present documentary proof proving:
- Non-disclosure or misrepresentation, and
- You have been conscious of this non-disclosure or misrepresentation, and
- There was a willful intention to deceive the insurer.
If an insurer denies your declare alleging fraud after the 60-month moratorium interval, you would possibly must problem their resolution in courtroom. And, the insurer should show their fraud claims with strong proof.
—Aayush Dubey is co-founder and analysis head of Beshak.org
