Selecting a medical policy may soon become simpler: All you need to know

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The Insurance Regulatory and Development Authority of India (IRDAI) has set up a working group to bring uniformity in exclusions in the medical insurance policies of different insurance companies, and also in the wordings of these exclusions. The regulator is also looking at minimising the list of exclusions. The laying down of a list of standard exclusions will make it easier for customers to select a medical insurance policy. But this step may also result in insurers revising their premiums.

Exclusions are illnesses or conditions that are not covered by insurers. Some are permanent exclusions that are not covered ever, while others, such as pre-existing medical conditions, may be covered after the insured has served a waiting period. 

With the rise in the number of players, each one has filed products that have their own list of diseases that are covered or excluded. “Insurance companies decide exclusions based on the product category, benefits offered, insured profile, target segment, and risk appetite for the segment,” says Jyoti Punja, chief operating and customer officer, Cigna TTK Health Insurance.

Such variations in exclusions can be confusing for investors. “The list of exclusions can be long and complex and can vary from one player to another. It makes the customer's task of choosing the right product difficult since he lacks the necessary knowledge and expertise,” says Prawal Kalita, director-benefit solutions, JLT Independent Insurance Brokers. If a policyholder buys an insurance product without understanding the exclusions, he could be in for an unpleasant surprise at the time of making a claim. 
For instance, there are group mediclaim policies of certain insurers that do not cover snake bite. “As brokers, we are aware of which insurer's policy covers snake bite and which insurer's doesn't and can advise our clients accordingly. But retail customers may not have access to this kind of advice,” says Kalita. Similarly, retail policies of some insurers do not cover autoimmune disorder. 

With advancements in medical science, new and more efficient procedures keep getting introduced that are not covered by insurers. “Take the instance of peritoneal dialysis. For chronic patients it is both cheaper and more efficient than standard dialysis. But it does not get covered either under hospitalisation or under day care. Similarly, several companies now offer home treatment by creating a hospital-like setup at home, which is 30-40 per cent cheaper than being in a hospital. Again, such services are not covered,” says Puneet Sahni, head-product development, SBI General Insurance.

Delhi HC's order served as trigger

A few months ago, the Delhi High Court had passed a judgement in which it had said that the current exclusionary clause for genetic disorders in insurance policies is too broad, ambiguous and discriminatory. It had asked IRDAI to relook the exclusionary clause in insurance contracts and ensure that insurers do not reject claims on the basis of exclusions relating to genetic disorders. This development, too, has acted as a trigger for IRDAI to undertake the current exercise. 

Many customers nowadays purchase their policies online. They may not spend as much time in trying to understand the exclusions of different players. “In a scenario where the coverages are different, purchasing a policy based only on premium comparison may not be right since you would not be comparing similar products,” says Sahni. 

Standardisation of exclusions by IRDAI may have a price impact. “It may result in revision of prices, but this will only become apparent once the list of standard exclusions becomes available,” adds Sahni. 

With advancements in medical science, new and more efficient procedures keep getting introduced that are not covered by insurers.

Do proper due diligence

Until the new norms on uniform exclusions come into existence, the buyer must do due diligence himself. “Customers do not read their policy documents carefully at the time of purchase. They are mostly unclear about the stated policy exclusions and waiting periods till the point of claim,” says Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance. The result is that they often have to foot the medical bill themselves for procedures and conditions which they had presumed would be covered by their policy.

“To spare themselves such nasty surprises, they should go through the inclusions, exclusions, and limitations of a policy before investing in one,” says Punja. They should also understand the waiting period for pre-existing diseases, since it can vary from two to four years. Opt for a policy with a lower waiting period. If they find the task of understanding the exclusions in different products difficult, they should take the help of a financial advisor in selecting the right policy.