Honest, full disclosures key to hassle-free health insurance claims

Customers must disclose habits like smoking and alcohol consumption honestly, regardless of frequency

In a recent ruling, the Supreme Court overturned the National Consumer Disputes Resolution Commission’s order and upheld Life Insurance Corpo­ration (LIC) of India’s decision to deny a claim due to non-disclosure of alcohol consumption. The insured had purchased Jeevan Arogya, a hospitalisation cash benefit policy. The court held that long-term alcohol use was a material fact, and failure to disclose it justified claim rejection after the policyholder’s death. 

Insurance, say experts, is based on the principle of utmost good faith. “This verdict reinforces the importance of transparency and full disclosure in the proposal form to ensure successful claim settlement,” says Shilpa Arora, co-founder and chief operating officer (COO), Insurance Samadhan. 

Disclose lifestyle habits 

Customers must disclose habits like smoking and alcohol consumption, regardless of frequency. “Whether it is occasional or regular, buyers must disclose alcohol consumption and smoking honestly. This information can influence premiums and claim settlement,” says Arora. Quantification is important. “Be specific: say that I drink, for instance, 30 ml (one peg) in a week, a month, or a quarter,” says Kapil Mehta, co-founder, SecureNow. 

“Decisions on proposals are based on various factors, including the level of consumption,” says Shashi Kant Dahuja, executive director and chief underwriting officer, Shriram General Insurance. 

Such disclosures become even more crucial in the case of critical illness policies. “Policies may get cancelled in case of non-disclosure and misrepresentation,” says Udayan Joshi, chief operating officer, SBI General Insurance. 

Reveal medical history 

Information on past ailments, hospitalisations, and surgeries must be shared. The guidelines define pre-existing diseases as those that were detected, or for which treatment was taken in the past three years, before taking the policy. “But to ensure smooth claim settlement, all pre-existing conditions, major illnesses and surgeries in the past should be disclosed to the best of the insured’s knowledge,” says Dahuja. 

Conditions like blood pressure must be disclosed even if they are under control due to medication. “If you are on medication for blood pressure, it may not show up in medical tests. However, the insurer will get to know about the condition at the time of claim (from your medical reports), increasing the risk of rejection,” says Mehta. 

When purchasing a family floater, granular disclosures must be made for each member. “Details of previous surgeries, disability with its percentage, family history of critical illnesses, and occupational history of each member should be correctly disclosed to prevent denial of claims,” says Joshi. 

Proposal forms are designed to extract detailed information about each member. Each me­mber must be treated as a separate entity during disclosure. 

List medications precisely 

Disclosing all medications, including those for long-term conditions such as thyroid disorders or dyslipidaemia, is mandatory. “Non-disclosure of these can straightaway lead to claim rejections,” says Dahuja. 

Mehta adds that while declaring, one should give the name of the medicine, the dosage, and the frequency. 

In many cases, insurers get to know of additional medical conditions (which even the customer may not be aware of) through medications. “When a person declares the names of medications, he may, for instance, mention a drug for benign prostatic hypertrophy (BPH). Without this declaration, the BPH would have been an undisclosed pre-existing disease,” says Dahuja. 

Moratorium period offers relief 

Under current Insurance Regul­atory and Development Auth­ority of India (Irdai) regulations, health insurance claims cannot be contested once the policy has been in force for 60 months. 

“Such policies can still be rejected for outright fraud, but the burden of proof falls on the insurer,” says Mehta.

 

Dos and don’ts for purchasers

 

*   Agents sometimes suggest hiding information for easier approval or lower premium

  *   Doing so can lead to claim rejection

  *   Once the proposal form is filled, verify the information given therein

  *   Prepurchase verification calls are recorded and can impact claim outcomes, so answer each question truthfully

  *   Other insurance policies, whether approved or denied, must be declared, as also previous claims