Exclusions: a key aspect that you miss while buying health policy

When it comes to insurance, a lay investor can never be completely sure whether her choice is the right one because she has to consider multiple factors while buying a policy. And obviously some factors are more important than others.

Let's take health insurance for instance, if your single deciding factor to buy a health cover is cost, then there is a good possibility that you might buy a policy with too many restrictions. In the process, you are most likely overseeing another important aspect - exclusions.

"There was once a time around say 5 years back, when pretty much every insurance policy had a standard structure, each policy in a way was similar to the other. Today, every policy has different terms and conditions, and reading and understanding finer details like exclusions become very important," says Ranjit Dani, Certified Financial Planner.

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Exclusions are conditions or circumstances which are not covered by your insurance policy. The policy documents mention a list of exclusions.

If you don't want to be in a position where you, despite having a medical cover, are forced to bear the hospitalisation cost, you better understand what exclusion is and how it works.

What is exclusion: Simply put, exclusions are conditions or circumstances which are not covered by your insurance policy. The policy documents mention a list of exclusions.

What are the types of exclusions?

For the sake of understanding, we can say that exclusions are two types. First, are those exclusions which will remain forever or permanent exclusions and second are those which a policy will cover after a waiting period. Take for instance, Reliance General Insurance policy Healthwise, which comes with permanent exclusions for treatments related to HIV / AIDS, abuse of alcohol or intoxicants, vaccination and inoculation, nuclear and war perils and naturopathy treatment, to name a few. Read the whole list of exclusions here.

The other set of exclusions is not permanent, but there is a waiting period. So, if your policy says any pre-existing illness for the first four years of the policy are an exclusion, it means that these pre-existing diseases will not be covered by the policy for 48 months. Take for instance ICICI Lombard's health insurance iHealth. "Pre-existing disease means any condition, ailment or injury or illness or related condition(s) for which you had developed signs or symptoms, and / or were diagnosed and / or received medical advice / treatment, 48 months prior to the period of insurance start date," this policy says. In fact, while most insurance companies exclude pre-existing diseases for four years, there are a few policies where it's for two-three years.

"Almost every policy has a list of pre-existing diseases which are exclusions permanently or with a waiting period, and hence, it becomes very important to give true information about any pre-existing diseases," says Deepak Yohanan, CEO, MyInsuranceClub.com. So, even as you keep in mind the exclusions in mind while buying the policy, do not lie about any pre-existing ailments.

Then there are certain diseases which come with a lesser waiting period of just a couple of years. Take for instance, Max Bhupa's Health@companion policy brochure. "For all Insured Persons the conditions listed below will be subject to a waiting period of 24 months and will be covered in the third Policy Year as long as the Insured Person has been insured continuously under the Policy without any break. E.g., Stones in biliary and urinary systems, lumps/cysts/nodules/polyps/internal tumours, gastric and duodenal ulcers...." See rest here.

"Today health policies come with an initial 30-day waiting period, where all illnesses, where a period of 30 days must pass after buying the policy before coverage begins," says Yohanan.

Take, for instance, HDFC Ergo's Health Suraksha policy, which has an initial 30-day waiting period. "This 30-day waiting period is, however, not applicable for renewals or accidents," Yohanan says.

Without a doubt, reading the terms and conditions, and policy becomes very important. Every policy comes with a 15-day free look-up period. Even if you spend five days going through the documents, it's eventually worth it. And don't come up with excuses that the print is too fine to read, all policy documents are available as PDFs and you can adjust the font size on your computer. And finally, check all the exclusions carefully, so that you are not caught off guard, when the moment of claim arises.

"The most important thing you should keep in mind here is the continuity of the policy. If you continue the policy without lapsing, your waiting period gets over and many exclusions are covered later on," says Dani. But if your policy lapses and you buy a new policy or renew a lapsed policy, you will have to start on waiting period all over again.

So, now that you know about the exclusions, may be it is about time to read those policy terms and conditions.


Published Date: Aug 13, 2013 04:11 pm | Updated Date: Dec 21, 2014 03:14 am


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