Claim Scenarios — Illustrative Approvals, Rejections & Disputes

Facts set against wording

A critical illness claim is decided by setting the facts against the policy wording. It is payable when the illness is one the policy lists, the diagnosis meets the policy's definition, the waiting and survival periods are satisfied and no exclusion applies.

Each of these is a question with a documentary answer. The medical records and test reports show what was diagnosed and when; the policy shows what is listed, how it is defined and which periods apply.

Why claims are declined

Common reasons for declining a claim include: the condition is not listed, the definition is not met, the diagnosis falls in the waiting period, the insured does not survive the survival period, an exclusion applies, the policy is not in force, or material facts were not disclosed at proposal.

The first reason is easy to miss. A policy pays only for the conditions and procedures it lists and defines. Angioplasty and bypass surgery are different procedures, so a policy that lists coronary artery bypass surgery but not angioplasty does not pay for an angioplasty. Some policies list angioplasty as a separate benefit; the wording decides.

Non-disclosure and the moratorium

A proposer has to disclose material facts, such as known medical conditions, when applying. If they were not disclosed, the insurer may contest a claim on that ground, but not for ever. After 60 continuous months of cover, called the moratorium period, a health insurance policy or claim cannot be contested for non-disclosure or misrepresentation unless fraud is established. The period was 96 months before IRDAI's 2024 change.

The moratorium has limits. It bars challenges for non-disclosure or misrepresentation only. Exclusions written into the policy as permanent still apply, and a condition that is not listed, or a diagnosis that does not meet the definition, is no more payable after 60 months than before.

If the policyholder disagrees

A complaint goes first to the insurer, which must resolve it within 14 days; it can also be registered on Bima Bharosa, IRDAI's grievance portal. If the complaint is rejected, is not answered for one month or is answered unsatisfactorily, the policyholder may approach the Insurance Ombudsman within one year. The Ombudsman charges no fee and can make an award of up to ₹50 lakh, a cap raised from ₹30 lakh with effect from 10 November 2023.

An award binds the insurer once the complainant accepts it, and the insurer must comply within 30 days. A complainant who is not satisfied remains free to go to a consumer commission or a court. Consumer commissions are open as a separate route under the Consumer Protection Act, 2019: the commission that hears a case depends on the premium paid, not the claim amount, and a complaint must be filed within two years of the cause of action. A matter pending before a court, a consumer commission or an arbitrator cannot be before the Ombudsman at the same time.

Rules at a glance

Key points

• A claim is payable when the illness is listed, the definition is met, the waiting and survival periods are satisfied and no exclusion applies.
• A condition or procedure that the policy does not list is not payable, however similar it is to one that is listed.
• After 60 continuous months of cover, a health policy claim cannot be contested for non-disclosure unless fraud is established.
• The moratorium does not override permanent exclusions or the policy's definitions.
• A complaint goes first to the insurer, then to the Insurance Ombudsman within one year, free of charge, for an award of up to ₹50 lakh.

Common misunderstandings

• The moratorium does not make every claim payable: it bars challenges for non-disclosure or misrepresentation, while unlisted conditions and permanent exclusions stay outside the cover.
• An Ombudsman's award does not close other routes for the complainant: it binds the insurer, while the complainant may still go to a consumer commission or court.
• The 60-month moratorium is not section 45 of the Insurance Act, 1938: that section, with its three-year limit, is a separate rule for life insurance policies.

Questions people ask