What's the fuss about Pre-existing Disease? 😵

• Introduction
• How to answer pre-existing disease questions?
• Why Honesty is the best policy when it comes to Insurance?
• Should I insist on a medical test now, so the insurer cannot blame me later?
• Understanding the Pre-existing Waiting Period
• What are the additional clauses an insurer can put apart from the standard waiting period?
• Some Common FAQs on Pre-existing Disease

Say you are looking at buying a second-hand car. What will be your process?

Let me guess - apart from taking the car for a ride, you will want to understand the age of the vehicle, whether it has been involved in any accidents, etc. You will deeply evaluate the current condition of the car, interiors, exteriors - in fact, you may pay an experienced mechanic to tag along with you, to ensure everything is checked. Your offer price will be based on meticulously checking all these parameters and more.

The health insurance process for the insurer is very similar to you evaluating the purchase of a second-hand car.

When you apply for a health insurance policy, the insurer is taking the financial responsibility of a lifetime of hospitalization expenses. They will hence, want to understand your health condition, medical history of any diseases or injuries as accurately as possible. They will want a record of your health and how well you’ve been taking care of yourself.

Most often, premiums are charged based on the assumption that the person buying the policy is healthy, living a moderately active lifestyle without any diseases. In these cases, insurers are able to provide an annual cover close to 30-50 times of the premium you pay.

Now, if you have an existing health condition or medical history, it indicates a higher likelihood that you will need hospitalization in the future. The insurer needs detailed information to check whether they can afford to offer you the standard deal and insure your health with the same benefits and at the same price, or not.

Here are some things to know before buying health insurance for pre-existing disease.

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• The insurer will ask for information on their proposal forms, on calls, or when they conduct a medical test. You are expected to diligently provide all information without intentionally hiding any facts.
• Ensure that you have done your homework - medication, medical files, talking to family doctors, etc.
• Never blindly answer all questions as no or yes, including questions around lifestyle - addictions like smoking, drinking, or loss or gain of weight. Every question needs to be answered carefully.
• In case you suffered from COVID 19, you must provide detailed information about the occurrence. Insurers would like to understand the severity.

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You should always provide the insurer accurate, truthful information about all your pre-existing conditions. When you don’t do that and keep the insurer in the dark - it is not a fair deal and the insurer ends up making a bad decision.

But that’s ‘the insurer’s problem’ right?

Wrong. Here’s what the insurer will do once they realize that you were hiding facts.

• Your claim could be declined and policy canceled.

In case you are hospitalized for an unrelated disease or say an injury, the insurer will be informed about your pre-existing condition, from your medical files. Once an insurer realizes a misrepresentation in a policy, they may decline your health insurance claim - even for a disease or injury unrelated to the hidden health condition. They might even cancel your policy altogether, even after you’ve paid premiums on time, for decades.

• You might not get a policy elsewhere

If the insurer realizes about a pre-existing disease when you’re hospitalized several years later, it might become extremely difficult for you to buy another policy. The costs quoted might skyrocket - or you might just not be given any policy at all.

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It’s very important to understand that medical tests suggested by an insurer do not investigate all the conditions you might be suffering from. In addition to the medical tests, insurers continue relying on your declarations (through proposal forms, tele-underwriting, disclosures to the attending doctor at the time of medical tests, etc.) to take a call.

So if you are thinking that by going through a medical test, you will be dissolved from your responsibility of providing an accurate history - then you are wrong.

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• You need to first get the definition of pre-existing disease as per regulations to understand the waiting period of pre-existing diseases.
• "Pre-existing disease" is described as any condition, ailment, injury, or disease diagnosed or treated by a doctor 48 months prior to the date your health insurance cover starts.
• Insurers will apply a waiting period of 2-4 years (depending on the conditions mentioned in the policy) for such diseases that have been diagnosed or treated, 48 months prior to the policy/cover start date.

For instance, Mr. Khan, 35 years old had a history of Tuberculosis two years ago, which was cured due to medication. If he is buying a health insurance policy, Tuberculosis (TB) will be considered as a pre-existing disease and a standard waiting period will apply in such cases.

• As per the regulatory definition, any disease that was diagnosed more than 48 months before the insurance policy started (and cured!) cannot be considered as pre-existing disease, and hence cannot be excluded under the pre-existing disease clause. You need to be careful that insurers do not put such an exclusion in your policy. For instance, if Mr. Khan, 35 years old had a history of Tuberculosis in his childhood which got cured before he became an adult. He has not undergone any treatment for Tuberculosis in the last 48 months. Now if he is buying a health insurance policy, Tuberculosis cannot be considered a pre-existing disease.

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Insurers respond to your application, based on your declarations and the severity of your health condition. In case a chronic illness, health condition (obesity, etc.), or unhealthy lifestyle (excessive smoking, etc.) is reported, the insurer may put additional conditions on your policy.

1. Increase premiums: Insurers apply a loading (usually 10% to 50%) on the standard premiums, based on your declarations.

2. Impose permanent exclusions: Some pre-existing diseases are likely to have severe effects on health for a long time, and sometimes even have the risk of a relapse. Recently, IRDAI through its recent guidelines on standardizing health insurance has allowed insurers to apply a permanent exclusion for a list of diseases where insurers were earlier declining coverage altogether. This list includes - Cancer, Epilepsy, Heart Ailment, Stroke, Liver disease, Pancreas ailments, Bowel Disease, Kidney Disease, Hepatitis B, HIV, Alzheimer's.

3. Impose restrictions: In the case of certain chronic health conditions, the insurer could impose restrictions such as additional copay for every claim.

4. Decline the policy: Some pre-existing conditions might be too complex for the insurer to estimate risk on. In such cases, they can make a call to not insure the individual and decline the proposal.

We need to understand that the insurer is a for-profit corporation, and not obliged to give anyone a policy. It is really a deal made, based on mutually acceptable terms. In case the equation doesn’t work for them - they will decline the proposal. If you have pre-existing conditions and you are able to secure a good policy, ensure you take the highest coverage you’re eligible for - since getting upgrades later when you are older could be a challenge.

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Can an Insurer hold me responsible for a disease I wasn’t aware of?

No. Not if you have done your basic homework we spoke about earlier. You are required to ensure you check every information you or your family holds before you answer all the questions you have been asked. Once you have done your due diligence, they cannot hold you responsible for disclosures on diseases you’re yourself not aware of.

What if I missed informing the insurer about a disease/health condition and realized later?

In case you forgot about a pre-existing condition and have already received your policy - inform your insurer now. They will re-evaluate your policy and make a decision to either continue, change terms (pricing, waiting periods, exclusions) or cancel it altogether. It is better to take this call now, than paying several premiums and getting a claim rejected on grounds of misrepresentation later.

I heard that insurers cannot reject a claim after 8 years - what about that 8-year moratorium recently announced?

The Moratorium basically says that after the first 8 years of paying premiums, an insurer cannot cancel your policy for oversight in mentioning a pre-existing disease. Special emphasis on the word - ‘Oversight.’ So, this will work only when you are able to prove that the misrepresentation was not intentional, and was clearly an oversight. Did you find this tricky? It is tricky, and hence you need to be super careful when you answer proposal form questions.

What do I do if I get diagnosed with a disease after the policy is issued?

If you get a disease/ condition such as diabetes or hypertension after the policy is issued - you have no responsibility to inform the insurer about that unless you’re upgrading the cover - in that case, the insurer may require you to declare any new disease you have been diagnosed with.

Can there be any issues with claims, if I have a pre-existing condition?

No, as mentioned earlier, if you have been diligent in informing the insurer about your health condition at the time of buying the policy, you don’t need to worry.

Just one important thing. During hospitalization, as far as possible, ensure the family member who is providing the medical history is well aware of all your medical history and does not make any guesswork - any carelessness then can impact the claims if the history provided doesn’t match the details, the insurance company has.

How good are the special policies for pre-existing conditions?

If you have a pre-existing disease, these special covers (for diabetes, heart disease, cancer, etc.) can be excellent options to explore as they can cover you immediately.

However, most of the affordable ones will either impose certain terms and limitations that you should carefully consider before finalizing a plan. Some such restrictions that ensure pricing remains affordable are -

• Copays
• Room-rent limits
• Sub-limits on specific treatments
• Waiting periods for specific treatments

I had a mental illness when I bought the policy in 2010, but my agent asked me not to disclose it since it was anyway not covered. What do I do now that mental illness is covered - would insurers cover it, in case of a claim?

No, your insurer will not cover any claims - related or unrelated to mental illness in the future. In fact, if they become aware of the mental illness when you get hospitalized for something else - they have the right to even cancel the entire policy. You need to inform the insurer right away - and pay the additional price or serve additional waiting periods. There is a chance that the insurer may cancel the policy, you’ll still have the opportunity to get a new policy from another provider with the right disclosures.

I got diagnosed with a new disease after I bought the policy - will it be covered?

Right now, yes, it will be covered. However, you will have to disclose the condition if and when you plan to upgrade the cover.

I have a pre-existing disease. Can I port to another insurer if not happy with mine?

In theory, yes. But, in our experience, we’ve seen that insurers are not keen to take up proposals for portability when a customer suffers from a chronic pre-existing condition - like diabetes. This could be worse if this person is above 50 years of age. So, portability will be difficult. This is true across types of insurers and policies - including group insurance like employers’ insurance or retail/ individual insurance. But of course, there is no harm trying, well before the expiry of your existing policy.

I have a medical history, I am not getting the plan of my choice - How should I go about buying a health insurance policy?

People with pre-existing diseases might find it difficult to get health insurance. The case gets trickier depending on the severity of the disease, number of diseases, lifestyle, and age.

In case the top policies with the best benefits are not available, you must compromise with the plans with lesser features and benefits, instead of waiting forever. We suggested a similar approach in our article on Senior Citizen Health Insurance.

Ensure you take the highest cover you can afford so that you do not have to go through such an exercise repeatedly in the future.

For the interim period, when your pre-existing conditions will be under a waiting period, you could look at specialized plans that cover these pre-existing conditions immediately.

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