Moratorium in life and health insurance: Does it really work?

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Subscribe to enjoy similar stories. The fatal shooting of Brian Thompson, who was chief executive of UnitedHealth Group Inc.’s insurance arm, has turned the spotlight on insurance companies rejecting policyholders’ claims for various reasons. In India, insurance laws offer policyholders a powerful tool they can invoke if insurance companies reject their claims arbitrarily.

But it may still require some running around before getting insurance companies to pay up. Take the case of Kolkata-based Sabita Mukherjea, who had been hospitalized due to a respiratory tract infection. “First, the insurer did not approve the cashless claim and later rejected the reimbursement claim saying hospitalisation was not necessary.

I had paid more than seven premiums in the policy," Mukherjea said. However, as per the moratorium clause for health insurance policies as defined by the Insurance Regulatory and Development Authority of India (Irdai), if a policyholder has paid five or more annual premiums, an insurance company cannot reject their claim even if they had not disclosed a pre-existing disease or any other important information. “No policy and claim of health insurance shall be contestable on any grounds of non-disclosure and/or misrepresentation except for established fraud, after the completion of the moratorium period, i.e., 60 months of continuous coverage," reads section 13 of chapter I of the Master Circular on IRDAI (Insurance Products) Regulations 2024–Health Insurance.