Health cover, the clauses that decide claims

Health cover is the policy most Indian households will actually claim on, and the one where the headline number explains the least.

The moratorium: the strongest protection you have

Start here, because it is the most valuable clause and the least known.

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

After five years of continuous cover, the insurer cannot refuse a claim because you failed to disclose something — only established fraud survives. And the circular adds that accrued credits gained under ported and migrated policies count toward the moratorium, so switching insurer does not reset the clock if the credits carry.

Two consequences for how you behave.

Continuity is an asset. Five years of unbroken cover converts a contestable policy into a nearly incontestable one. Letting a policy lapse and rebuying destroys that, which is why a lapse is far more expensive than the premium.

It does not excuse non-disclosure now. Within the first sixty months, a non-disclosure is exactly what gets a claim contested, and fraud is never protected. Disclose fully at proposal — the same point chapter 2 made for life cover.

Waiting periods

Three kinds, and they are different:

Initial waiting period — typically the first 30 days, excluding everything except accidents.

Specific disease waiting periods — named conditions such as cataract, hernia or joint replacement, excluded for a stated period.

Pre-existing disease waiting period — for conditions you had before buying. This is the one people are caught by, and it is why a policy bought after a diagnosis is far less useful than one bought before.

The practical rule: buy health cover while you are healthy. Every waiting period runs from when the policy starts, so cover bought young and kept continuously is worth much more than the same policy bought at the first sign of trouble — and by then, pre-existing exclusions may make it nearly useless for the thing you need it for.

The clauses that quietly reduce what you are paid

The headline sum insured is rarely what limits a claim. These are:

Room rent limit. A cap on the daily room charge, often expressed as a percentage of the sum insured. Its damage is indirect and much larger than it looks — hospitals commonly tie other charges to the room category, so taking a dearer room can proportionately reduce what the insurer pays across surgery, doctor's fees and nursing, not just the room.

Co-payment. A fixed share of every claim you bear. A 20% co-pay on a ₹4 lakh claim is ₹80,000 out of pocket, every time.

Sub-limits on specific treatments, capping common procedures below their real cost.

Disease-wise capping, similar.

Non-medical expense exclusions — consumables, gloves, syringes. Routinely several per cent of a bill.

None of these appears in the comparison tables, which rank on sum insured and premium. A ₹10 lakh policy with a room rent limit, a co-pay and sub-limits can pay less on a real claim than a ₹5 lakh policy without them.

What IRDAI now requires on claims

The 2024 circular sets timelines that are worth knowing because they are enforceable:

Cashless authorisation: the insurer "shall decide on the request for cashless authorization immediately but not more than one hour of receipt of request."

Discharge: the insurer "shall grant final authorization within three hours of the receipt of discharge authorization request from the hospital. In no case, the policyholder shall be made to wait to be discharged from the Hospital." If there is a delay beyond three hours, any additional hospital charge "shall be borne by the insurer from shareholder's fund" — not from policyholder funds, which is a deliberate choice about who pays for the insurer's delay.

Repudiation: "No claim shall be repudiated without the approval of PMC or a three-member committee." A claim cannot be rejected by one person at a desk.

And insurers "shall strive to achieve 100% cashless claim settlement in a time bound manner", with reimbursement reduced to exceptional circumstances.

If a hospital keeps you waiting past three hours for discharge authorisation, that is a documented breach with a stated remedy. Knowing the timeline is what lets you invoke it.

Porting, and why it preserves more than you think

You can move to another insurer while carrying accrued credits — sum insured, no-claim bonus, specific waiting periods, pre-existing disease waiting period and the moratorium period itself.

That last one is why porting beats rebuying. A fresh policy restarts the sixty-month clock; a port does not.

Working the problem

Two policies, ₹10 lakh cover, similar premiums. Policy A: 1% room rent limit, 20% co-payment. Policy B: neither. Claim ₹4 lakh, room chosen costs 2% of sum insured.

Policy A. The room rent limit is 1% of ₹10 lakh = ₹10,000 a day. The room taken costs 2% = ₹20,000 a day — double the limit.

The direct effect is the room excess. The larger effect is proportionate deduction: where the policy applies associated charges by room category, taking a room at twice the eligible rate can see the insurer settle associated charges at the proportion eligible — in this case roughly half — across surgery, anaesthesia, doctor's visits and nursing.

Taking the simple proportionate case on a ₹4,00,000 bill: the eligible amount falls to roughly ₹2,00,000. Then the 20% co-payment applies to what remains: ₹2,00,000 × 0.80 = ₹1,60,000 paid.

You bear about ₹2,40,000 of a ₹4,00,000 claim, on a ₹10 lakh policy.

Policy B. No room rent limit, so no proportionate deduction. No co-payment. Subject to the usual non-medical exclusions, the claim is largely paid — say ₹3,80,000 after consumables.

Which I would buy: Policy B, clearly, and the margin is not close. The two policies have the same headline cover and differ by more than two lakh rupees on a single mid-sized claim.

The qualification I would state. The exact mechanics of proportionate deduction vary by policy wording — some apply it to a defined list of associated charges, some exclude certain heads, and a few have removed it. So read the wording rather than assuming the arithmetic above, which is the standard case and not a universal rule. The direction is never in doubt; the magnitude is in the document.

The general lesson: compare policies on their clauses, not their cover. A room rent limit and a co-payment together can cut the real cover in half, and neither appears in the number on the front page.

The point

The moratorium is the strongest clause you have: after sixty months of continuous coverage no claim is contestable for non-disclosure or misrepresentation, only for established fraud, and ported credits carry toward it — so continuity is an asset and a lapse is expensive. Waiting periods run from when cover starts, which is why health insurance should be bought while healthy. What actually limits a claim is rarely the sum insured but the room rent limit, co-payment and sub-limits, which together can halve what is paid on a real claim. IRDAI now requires cashless decisions within one hour, discharge authorisation within three, and repudiation only with committee approval.