What is the Moratorium Period and How Does it Affect My Policy?

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Moratorium period or look-back period refers to the time frame after which your insurer can not reject any claims for pre-existing diseases, like diabetes, unless it's a case of proven fraud or permanent exclusions.


As for the duration of this period, the 2024 guidelines of the Insurance Regulatory and Development Authority of India (IRDAI) have reduced it from 8 years to 5 years. In fact, health insurance companies in India must follow a moratorium period.


How the Moratorium Period Affects Your Health Insurance Policy?



  1. While Buying the Policy


While issuing your health insurance policy, the insurer will ask you about any existing illness or medical condition you may suffer from. You should be honest about it to avoid any claim rejection in future.


In case you have any PED conditions, your insurer will ask you to submit certain medical documents or require a pre-medical check-up. After evaluating the condition and its risk, the company will impose a waiting period of 1 to 3 years. This period applies alongside the moratorium period.



  1. After the Moratorium Period


Once the 5-year moratorium period is over, your insurer will cover all the medical expenses related to your PED conditions. This way, you can effectively reduce your financial burden from the high costs of your treatments.


However, remember, although the moratorium period has a fixed timeframe, your waiting period can change based on the severity of the PED condition.


Why is the Moratorium Period Applied to a Health Insurance Plan?



  1. It helps the health insurance companies to face costly claims coming from the PED frequently.



  1. Policyholders can avoid claim rejections due to indirect association with a pre-existing condition resulting from non-disclosure or misrepresentation.



  1. It prevents people from buying health insurance only after being diagnosed with a medical condition.



  1. This period encourages policyholders with a history of critical illness to buy health insurance early when medical risks are low.



  1. With this period, policyholders can keep their premiums low even after developing any PED conditions.



  1. It helps build trust between the insurer and policyholder by honestly disclosing their medical history while buying the policy.


How can I Benefit from the Moratorium Period?



  1. Guaranteed Claim Security: After 5 continuous years, the insurer generally issues the PED claims with fewer disputes.



  1. Reduced Financial Stress: After this period, you can get coverage for long-term illnesses, helping you manage expensive treatments without high out-of-pocket costs.



  1. Encourages Early Investment: If you buy health insurance early, you can complete the moratorium period sooner and enjoy full coverage benefits.



  1. Protection Against Medical Inflation: With medical inflation rising at around 15% annually, continuous coverage after this period will help you to be financially prepared for rising healthcare costs.


Final Words


Overall, the moratorium period helps you reduce the risk of claim rejection after a specific period. While building trust between the insurer and policyholder, this period ensures your long-term financial security. It also encourages transparency and consistency in maintaining your health insurance policy.