Health Insurance: Disclose all Facts to Reduce the Risk of Rejection

Written on Monday, February 15, 2016
By Mukesh Kumar- Executive Director, HDFC ERGO

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Having Health Insurance is not an option anymore – it is a necessity today due to the rising medical costs. Yet, adequate care is not taken while buying a Health Insurance – a product that is so critical. Insurance claims, at times, get rejected because the policyholder fails to provide all adequate information– sometimes intentionally, and most of the times, out of ignorance.

 

The business of Insurance is based on the doctrine of utmost good faith, which requires that the party seeking insurance discloses all relevant personal information. This means, if you are applying for a Health Insurance, you are required to correctly disclose all your lifestyle and occupation-related information and any health problems you or your family members may have had. (In the same token, the insurance agent selling the coverage to you must disclose all the critical information you need to know about your contract and its terms.)

 

The seeds of a potential rejection could be sown at the time of filing the insurance form. Apart from understanding the product, its span of coverage and inclusions/exclusions, it is essential that you fill the application form yourself instead of outsourcing the job to your insurance agent. Just signing the form and expecting the insurance agent to do the rest can prove costly later. Remember, when you sign the form, you are declaring that you have understood all of the policy features and its terms and conditions. The declarations in the application form are the basis on which the insurance companies underwrite policies, that is, assess the risk and calculate the premium to cover that risk. When you file for a claim, the insurer checks the authenticity of these declarations. Furnishing of incorrect information or suppression of facts can be a cause of rejection. Let’s look at some crucial information that MUST be disclosed in the proposal form for avoiding surprises at the time of claims.

 

Personal Health: The first parameter that comes to our mind when we mention Health Insurance is the smoker/non-smoker criterion. Logically, addictive substances such as tobacco and alcohol impact health adversely. So, if you are a tobacco user, insurers must know. The premium depends on the frequency, type of consumption, quantity consumed as well as the period for which you have been addicted. Depending on the underwriter’s assessment, the insurance company can take a call on whether to extend the cover to such applicant and at what premium. You cannot get away if you have quit smoking years ago. Even after you quit smoking, the effects of smoking take some years to go away. You must disclose all the details to the insurer, whose assessment will be based on factors like duration for which you were addicted and the effect the habit has had on you.

 

Medical History: This is carefully scrutinized to assess the long-term costs of financing health care. If an applicant has a history of illness, it must be disclosed upfront. While disclosing correct medical history means higher premium, there will not be any surprises at the time of claims. Family History: Not only your own, but your family’s medical history is taken into account by the underwriter before extending an insurance coverage to you. A critical illness of an immediate family member could make an insurance company wary. This is because some illnesses can be hereditary. They consider such cases carefully and include this point during the risk assessment process. However, all family histories need not have a negative impact. Only certain types, especially genetic, are viewed as bad risks. So are cases where both parents are suffering from the same disease and disorder, and therefore there is high probability that it can impact the life of the individual as well.

 

Occupation: Occupational Risk is a key measure to evaluate wellness and risk of accident. People in sedentary jobs are more prone to cardiovascular diseases. So, the nature of work is important for the correct risk assessment. The premium also depends on the occupational details. The basic premium is calculated considering normal risk. Any increased risk is covered by additional premium. There is additional premium for individuals in hazardous occupations or those who have riskier hobbies. The insurer can even refuse them coverage.

 

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