In 2019, the Insurance Regulatory and Development Authority of India (IRDAI) introduced a crucial safeguard for policyholders – the eight-year moratorium clause. This regulatory measure aims to alleviate concerns among policyholders regarding claim settlements, offering reassurance after years of premium payments.
The primary objective of the moratorium clause is to prevent claim rejections based on the concealment of pre-existing diseases once the eight-year period concludes. According to industry experts, the intent is clear – after this specified duration, insurance policies should no longer be contestable, except in cases of proven fraud or permanent exclusions.
After the moratorium period ends, concealment of pre-existing diseases cannot trigger claim rejection." He further clarified that fraud is distinct from the non-disclosure of lifestyle conditions, such as cholesterol or mild hypertension.
However, challenges arise as some companies may interpret non-disclosure of ailments as fraud, leading to claim denials. Policyholders facing such rejections can seek recourse through the insurance ombudsman. The question arises: Can a policyholder rectify the omission of a health condition during policy purchase at the time of renewal? If there are concerns about claim rejection due to non-disclosure, it is advisable to make the necessary disclosures as soon as possible, even after the policy is issued. While there may be a risk of policy cancellation, industry experts unanimously agree that transparency is key.
In conclusion, the eight-year moratorium clause mandated by the IRDAI serves as a crucial protective measure for policyholders, offering them peace of mind and a clear framework for addressing concerns related to claim settlements. Transparency and timely disclosure remain paramount in ensuring a smooth insurance experience.
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