Pre existing Disease

Suppose a person has Diabetes Mellitus Type 1. He buys an indemnity insurance policy of Rs.5 lakhs. Waiting period for PED is 36 months. (IRDAI allows a maximum of 48 months).

Scenario 1

We assume that the person has disclosed the disease in the proposal form and that the proposal has been accepted by the insurer. This person suffers from a brain stroke in the 3^rd year of the policy and makes a claim of Rs.2.5 lakhs. Will his claim be entertained? Depends on the situation.. If during investigations at the hospital it is found that the stroke resulted from Diabetes Mellitus, the claim will be repudiated.

Scenario 2

Again in this case, disclosure has been made and proposal accepted. This time the claim occurs in the 4^th year of the policy. What happens now? The claim will be paid as the waiting period of 36 months is over.

Scenario 3

In this case, we assume that disclosure of Diabetes Mellitus has not been made in the proposal form. This time the claim is made in the 9^th month of the policy. In this situation, claim will be rejected as pre existing disease has not been disclosed at the inception of the policy. Not only that, the policy may be terminated and all paid premiums forfeited. Once a policy is cancelled due to non disclosure, it will very difficult to buy another policy.

Scenario 4

Disclosure of Diabetes Mellitus is not made at the time of buying the policy. This time the claim is made after the waiting period of 36 months. Although the waiting period is over, the claim will not be paid, as there was non disclosure of Diabetes Mellitus at the inception of the policy. The basic premise here is that if the disclosure of pre existing disease had been made, the insurer would have declined the proposal or charged a higher premium. Or maybe the insurer would have imposed certain conditions before issuing the policy.

Thus, we can say that claim amount will be paid only when disclosure has been made and waiting period for that pre existing disease is over. Otherwise the claim is likely to be denied.

Scenario 5

The insured claims that he was not aware that he had Diabetes Mellitus while filling up the proposal form. His contention is that since he was not aware, how could he disclose? Now this is a grey area where judgments can vary. The treating doctor’s certificate, discharge summary, and other investigative reports will have to be examined to ascertain the duration of the disease.

Remarks: Most disputes in health insurance are related to pre existing diseases. It is imperative that pre existing disease if any is disclosed at the time of filling up the proposal form. Most importantly, pre existing disease is covered subject to it being declared at the time of proposal and accepted by the insurer.

Note: If the policy is ported, waiting period exhausted in the previous policy will be deducted from the policy with the new insurer. If sum insured is being enhanced, waiting period for pre existing disease or specified diseases will apply afresh to the enhanced portion.