How Moratorium Works in Health Insurance Rights

Health insurance is meant to protect against medical bills, yet it may not cover preexisting conditions or illnesses that have not been disclosed. For example, prior to the IRDA moratorium regulation, policyholders occasionally had claims denied after several years due to minor past illnesses.

The moratorium period, however, protects long-term policyholders. After a period of 60 months of prior continuous coverage, the insurer can no longer deny any claim due to a preexisting condition (except in cases of intentional misrepresentation).

What is the Moratorium Period?

The moratorium time is the ‘look-back’ period in a health policy. With the existing IRDAI regulations, it is 5 years (60 months) of continuous coverage. In the course of these years, insurers might impose waiting periods or refuse compensation for pre‑existing or undisclosed conditions.

After 5 years, however, such a condition is subject to treatment as ordinary covered benefits. IRDAI introduced this rule to improve fairness: after 5 years, even earlier undisclosed illnesses should be accepted. The previous IRDAI guidelines set it at 8 years, but it has now been reduced to 5 years.

Insurer Rights Before and After Moratorium

Prior to a moratorium period, insurers have extensive rights against claims of non-disclosure, misrepresentation, or mistakes in the proposal form. Most of these rights are denied to insurers after the moratorium period (5 consecutive years of active coverage under IRDAI rules), except where there is evidence of intentional concealment of material information‌.

Here is a detailed overview:

Moratorium vs Waiting Period

The moratorium period is different from specific waiting periods. The average waiting time (for listed treatments or surgeries) is between 30 and 36 months, which tends to differ based on the policy type and insurer.

However, the moratorium period is fixed by the IRDAI at 5 years (60 months).

For example, a plan may exclude cataract surgery for 2 years. Thus, the insured can claim coverage for this procedure after the completion of the 2-year waiting period.

Alternatively, a policyholder may have high blood pressure before policy purchase. After the 5-year moratorium period, he/she will be liable for coverage for treatments related to high blood pressure.

Once the moratorium period ends, your policy will effectively cover past ailments just like any other illness. Permanent exclusions are always omitted, and increases in the sum insured would always create a new moratorium period (so always read the policy terms).