Insurance is the cornerstone of financial security, offering individuals a safety net against life's uncertainties. At its core, insurance is built on principles of transparency, good faith, and accurate information exchange. When purchasing an insurance policy, individuals are required to disclose all relevant information to their insurer. This practice, known as the disclosure of material facts, forms the foundation of a fair and equitable insurance contract. 

However, just like any contractual agreement, the omission of relevant information or the non-disclosure of material facts can have serious repercussions for both policyholders and insurers, undermining the very foundation of trust that insurance represents. In this article, we will explore the significance of disclosing material facts and the potential consequences of failing to do so.

Understanding Material Facts:

The contract of insurance is based on the doctrine of ‘Utmost Good Faith’, which means a person applying for an insurance cover has to disclose and reveal all material information required by the insurance company. Material Information means all the information based on which the underwriter accesses the risk profile of the person and decides to accept the risk and issue the insurance policy or decline the same or to determine the terms and conditions of coverage, and establish appropriate premiums. Examples of material facts relevant for an individual would include a person's profile like age, personal & family medical history, occupation, hobbies, criminal record, etc., and other information like income, previous claims, policies from other insurers, and so on, depending on the nature of insurance policy. 

Insurers heavily rely on the accuracy of the information provided by policyholders during underwriting to assess risk effectively. Policyholders have a legal and moral duty to provide complete and accurate information to their insurers during the application process. This duty is outlined by the IRDAI guidelines and is applicable to all types of insurance, be it life, health, or general insurance. 

Consequences of Non-Disclosure

Non-disclosure of any material facts may result in the policy being considered null and void from the very beginning and the insurer will not pay out any claims or return any premiums. Policyholders will be left without the protection intended and financial well-being may be compromised. Non-disclosure can also lead to claim denial leaving the policyholder to bear the entire financial burden. It can also affect a policyholder's ability to obtain insurance in the future as insurers have access to shared information and a record of non-disclosure can make it challenging to secure coverage or result in higher premiums. Thus, it becomes very important that accurate and complete information is shared in the proposal form. 

Understanding the Reasons Behind Non-Disclosure:

Non-disclosure of material facts in insurance in India can occur for a variety of reasons as we we can see below:

1. Lack of Awareness/ Misunderstanding: Many policyholders may not fully comprehend what constitutes a material fact due to a lack of awareness or misunderstanding. They might unintentionally and unknowingly withhold specific information required to be revealed in the proposal form. Few might encounter difficulties in understanding or accurately filling out the proposal form because of language or literacy challenges. Additionally, some may presume that some information may be irrelevant and not important to be mentioned. 

2. Intent to Quickly Fill Forms: Some people may view the proposal form filling and the disclosure procedure as time-consuming and difficult. They may take the entire process casually and refrain from delivering complete and accurate data while filling out lengthy forms or providing extensive information. Policyholders who are anxious to get insurance may speed up the application procedure and omit crucial information because they believe it to be unimportant. 

3. Intentional Fraud: In certain cases, policyholders may purposefully omit relevant information to influence the underwriting procedure in order to get coverage or cut premiums under false pretenses. Other times, even brokers or insurance agents would encourage policyholders to omit information in order to hasten the approval procedure or close a deal.

4. Confusion or Forgetfulness: Policyholders might genuinely forget to mention certain details. There might also be instances where people do not really have a complete understanding of their medical history and status. 

5. Depending on Others to fill the Form: There can also be instances where some important information is missed when the proposal form is filled by someone else, likely the insurance agent /broker or say a relative of the applicant. Such a scenario may arise when the applicant is uncomfortable filling out the form due to literacy or language limitations.

How to avoid non-disclosure?

As we can see from the reasons for non-disclosure of material facts, it becomes clear that the same can be easily avoided once we understand the importance of full and fair disclosure. The best way to do this is to take appropriate time to properly read and understand every piece of information asked carefully. You may seek clarification from your insurance agent if something is not clear. Please do not hurry and take time to remember any past medical history, ask spouse and parents for relevant information if you are not sure. Having an experienced insurance agent from a reputed firm also helps a lot in ensuring that the proposal form is properly filled. 

Bottom Line

In summary, material facts are essential as they enable insurers to make informed decisions and ensure that insurance contracts are fair and equitable. Both policyholders and insurers must uphold the principle of utmost good faith, fostering transparency and trust. If everyone gives proper information, the pricing of the policies can be appropriately made and the overall premiums would also become more affordable for everyone. Applicants should understand that failure to disclose material facts can have severe repercussions in times of need and thus is never a wise thing to do. Lastly, a good insurance agent /broker can be of great help not only during the application process but in the entire journey from understanding the need, finding suitable policy cover, helping in the application process, and then especially in the claim process helping you manage all comfortably.

Health insurance has always acted as a crucial safety net, giving people and families access to financial security against unanticipated medical expenses. Despite its importance, there are still many complaints that arise in the world of health insurance. Policyholders frequently experience difficulties and annoyances due to a variety of reasons, such as coverage restrictions, claim rejections, postponed settlements, and insufficient customer service. 

When there is a perceived mismatch between policyholders' expectations and the services offered by insurance firms, grievances related to health insurance arise. These grievances can undermine the intended purpose of health insurance, creating stress and financial burdens on individuals when they are in need of the most support. In this article, we will bring light to some of the common challenges or grievances that buyers of health insurance policies may experience if they are not careful and have not been fully honest.

1. Mis-selling: When an insurance advisor gives the policyholder inaccurate or misleading details about a policy's features, benefits, or terms, this is known as mis-selling. This may result in the policyholder buying a policy that does not meet their needs or may not offer the coverage they had been expecting for. Thus, individuals should be cautious when buying insurance coverage to safeguard themselves from mis-selling. It's crucial to thoroughly understand the policy terms, read the fine print, ask questions, and compare policies from different insurers before making a decision. In order to make sure they select the insurance products that best suit their needs and financial objectives, one can make sure that you are dealing with established and reputed brokers in the market. 

2. Wrong Policy Documents/ Copy: This complaint happens when an insurance policyholder pays the premium but does not receive the policy copy as intended. Alternatively, they may receive a policy document that contains inaccurate information about the policyholder, the scope of coverage, or the type of policy. In these situations, receiving the appropriate policy paperwork is essential for ensuring the validity and accuracy of the policyholder's coverage.

The policyholder should speak with the insurance advisor or the insurer right away to get this anomaly resolved. To assist the organization in locating the payment and determining the problem, they should offer documentation of premium payments as well as all pertinent information. Policyholders should constantly double-check their personal, contact and other crucial information before giving it to the insurance firm to avoid such problems. They should also keep track of any premium payments, correspondence with the insurance provider, and other pertinent information associated with the acquisition of the policy for future reference.

3. Claim Approval Delays: Claim approval delays happen when an insurance provider takes an unusual long time to examine and approve a submitted claim. When a policyholder relies on the claim amount to pay for immediate needs like repairs, medical bills, or other urgent needs, such delays might put them in a difficult financial situation and cause them inconvenience.

The following actions can be taken by policyholders to reduce claim approval delays:

• Submit the claim with correct and comprehensive documentation.
• Engage completely in any investigation that your insurance provider requests.
• Maintain ongoing communication with the claims department and check in on the status of the claim.
• Be familiar with the terms and conditions of the policy to avoid any unpleasant surprises when filing claims.
• In case the insurance provider asks for more details or supporting documents, provide it as soon as possible.

However, several times, the guidelines of the insurer may call for extra caution in situations where the claim amount is very high. In such cases, after the claim is handled at one end, a certain length of time passes before your claim is sent and you receive the insurer's consent. The transmission of information pertaining to your claim to you may be delayed as a result of this gap in time.

4. Claim Rejection: When an insurance company rejects a claim for various kinds of reasons, it is known as a claim rejection. It can be as a result of relevant information not being disclosed during the insurance application, the claim not satisfying policy requirements, or the claim falling under policy exclusions. Rejecting a claim can be upsetting, particularly if the policyholder sincerely feels that their claim should be accepted.

Policyholders should thoroughly study their insurance plans, comprehend the coverage, and make sure all requirements are met in order to avoid having claims denied. During the application procedure for a policy, it's imperative to provide all pertinent information honestly. If your claim gets rejected, the insurance provider is required to disclose the reason. Additionally, you can discover the grounds for the denial of your claim. However, the IRDAI, Insurance Regulatory and Development Authority of India, mandates that insurance providers provide justification for denial of claims.

Grievance redressal: 

In India, the IRDAI is the regulator overseeing the insurance industry and defending the rights of policyholders. In case of any grievance or anomaly, the policyholder should first make sure that he/she has read all the policy related documents and fine print carefully and that the complaint or claim is genuine and can be backed with relevant supporting facts, communications and documents. Once convinced, the policyholder can initially get in touch with the insurance advisor for further clarification and guidance. One can also contact the concerned insurer customer service or grievance department for the resolution. Ideally all common and addressable complaints would be resolved by now. However, in rare cases of a genuine complaint yet not resolved, the last option left is for the policyholder to escalate the situation to IRDAI for additional support and resolution. 

Bottom line: 

The chances of any grievance happening can be greatly reduced if one is following proper due-diligence procedures, has researched and read all the policy related documents (especially policy terms), inclusions and exclusions, and has provided all the necessary and correct details. Also, working with established and reputed insurance brokers in the market helps a lot in all these aspects. The right advisor will also help you in identifying the suitable products as per your requirement and needs. Ultimately though, your active participation and understanding is crucial in your entire experience of having insurance policies.

Are you unhappy with your current health insurance company or plan? Do you find other health insurance plans to offer a comprehensive scope of coverage or is cost-effective or have lower or minimal coverage restrictions and even have a simpler claim settlement process? Then portability can be a good option for you. The process of portability involves moving existing insurance to a new one with a different insurer without forfeiting any accrued benefits, such as the No Claim Bonus (NCB), waiting period credit, etc. The IRDA guidelines states that no insurer, whether new or existing, is allowed to charge a fee for transferring a health insurance policy.

To ensure an effortless switch and avoid any potential pitfalls, insured should take into account key details before porting their current health insurance policy. 

What is Portability?

The term "portability" describes the ease with which something may be carried, moved, or relocated from one place to another. In the context of health insurance, the ability of policyholders to switch from one health insurance provider to another without losing the benefits accumulated under their present policy is referred to as portability. It enables people to change insurance companies while keeping their policy's waiting periods, pre-existing disease coverage, and other benefits in place. The Insurance Regulatory and Development Authority of India (IRDAI) launched health insurance portability in India in 2011. By allowing people the freedom to select a different insurer that better meets their needs, it is aimed to empower policyholders and encourage competition among health insurance providers.

After shortly outlining portability, let's move on to the most frequently asked question, "Why portability is important?" 

Why Portability?

With portability, when a policyholder changes to a new health insurance provider, they do not forfeit any accrued renewal benefits. However, there are numerous concerns with the decision to switch health insurance providers. The answer is simple; with increased competition among service providers, insurers may be hesitant to keep their current insurance due to reasons including existing insurer's services are insufficient, they charge excessive premiums, and their products have sub-limits. On top of that, an insured person's needs may vary during the course of his policy schedule, and portability can be the ideal way to accommodate these new needs. While porting would enable people to change to a health insurance plan with improved coverage, such as higher sum insured at lower premiums, additional perks, or coverage for certain treatments.

In order to better meet their healthcare needs and address gaps in their current coverage, policyholders may enhance their coverage. Before making the transfer from their existing health insurance to a new one, it is crucial that you give your insurance advisor all pertinent information, such as any pre-existing / present illnesses / major accidents, recent insurance proposal / claim denials, or illnesses that have been cured. Make sure that the new plan will cover any pre-existing medical conditions which you have, without any waiting periods or restrictions if you have any. Although keep in mind that portability is only feasible at the time of policy renewal.

How to port?

1. To begin the procedure, you may need to fill out the IRDA portability form. It should be noted that a policyholder might seek portability when the insurance is up for renewal. You must contact the insurance company where you want to move your current health insurance coverage. The new insurer will give you two documents: a portability form and a proposal form. They may also send information on the company's numerous health insurance policies. 
2. Once you have submitted the relevant documents to your new insurance provider, they will contact your old insurer and obtain your medical records and other pertinent information. They may also request your claim history. When your old insurer receives such a request, it is obligated to share this information.
3. When the new insurer receives all of the necessary information, they will decide whether or not to provide you with a health insurance policy. This is known as policy underwriting. An underwriter will examine your data and consider your risk profile before deciding whether or not to provide you with health insurance. If your new insurance provider decides to insure you, they must underwrite your policy within 15 days. If you miss this deadline, you are assumed to be insured by the new insurance company.

Can requests for Health Insurance Portability get denied?

While IRDAI gave all policyholders the ability to request portability, it also granted health insurance providers a right to refuse these requests. As a result, the underwriter examines each request for portability just like a new request.

When a health insurance provider receives a request for portability, the underwriter evaluates the risk exposure to determine the premium required to be charged. If the insurer determines that the plan is not favourable, it may be rejected. In that situation, the policyholder won't have any choice but to keep his or her existing insurance policy.

Bottom Line:

By carefully considering all the factors, the policyholder can make informed decisions on switching the health policy, and ensuring that the new policy meets his present requirements.

Dwight D. Eisenhower rightly said that “A people that values its privileges above their principles soon loses both.” Thus, if individuals prioritize their privileges (e.g., seeking the lowest premium or most extensive coverage) above their principles (e.g., equitable access, affordability for all, continuity of care), they may compromise the very principles that underpin the purpose of their health insurance cover. Therefore, the quote serves as a reminder that it is crucial to prioritize and uphold the common need of your health insurance policy, rather than simply pursuing short-term/ certain influencing privileges, to ensure a robust and equitable healthcare system for yourself.

In today’s world, most people have a sedentary lifestyle with unhealthy dietary habits. Nowadays, we are even more prone to diseases caused due to stress and hectic schedules. According to the World Health Organisation (WHO), India has nearly 50.8 million diabetics, the highest in the world and 25 million people with cardiovascular illnesses accounting for 60% of all cases worldwide. However, with time and inflation, the cost of treating these diseases has also increased substantially. 

Medical treatment cost is one of the prime reasons for people falling back into poverty. According to the National Health Accounts, an average Indian household’s out-of-pocket expenditure (OOPE) on healthcare stood at around 48.21% in 2018-19 which is very high when compared to a global average of around 18.1% in 2019 as per the World Health Organisation (WHO). As per WHO estimates in 2022, high OOPE on health was seen as impoverishing some 55 million Indians annually, with over 17% of households incurring catastrophic levels of health expenditures every year. 

Needless to say, one solution to this challenge is adequate Health Insurance. But we would even go a step ahead and propose a complete health insurance portfolio.

Why should you get a health insurance portfolio?

A health insurance portfolio is like a combination of different types of plans to ensure that you get the maximum benefits and medical coverage as is possible at an affordable cost. The idea is to give you comfort and confidence to not worry about medical expenses in case of any medical emergency when the need arises with your health insurance plans in the portfolio. While counting on your health insurance coverage, you would typically avail facilities such as cashless treatment; pre & post-hospitalisation expenses; no claim bonus, etc along with the tax benefits.

We can choose from different types of health insurance policies depending on our needs and wants. There are three main types of plans under health insurance to choose from:

1) Base Plan:

The base health insurance policy is like your standard, standalone health insurance policy and covers medical expenses up to the sum insured amount. The coverage and benefits of the insurance vary depending on the insurance provider. Some of the common features and benefits to look at while considering a base health insurance plan is a comprehensive coverage, pre & post-hospitalisation expenses and a regular premium. 

2) Top-Up Plan:

A Top-up plan offers extra coverage for a claim exceeding the base amount. Under a typical base health insurance plan, the insurer pays for claims up to the coverage amount i.e. the Sum Insured. A top-up policy is applicable when your insurance claim passes the threshold limit (deductible). The top-up plan typically covers expenses relating to a single hospitalisation and the claimed expenses have to cross the threshold deductible, and anything beyond the threshold can be claimed subject to the limits of the Top-Up cover. For eg., if the top-up plan of 5 lakh cover has a deductible of 2 lakh, then only when the single claim amount exceeds 2 lakh will the top-up plan be triggered.

As seen, the primary /base health insurance is supplemented using top-up health insurance. In the event that your current health insurance policy's maximum sum insured is reached, the top-up plan will provide you with the desirable medical coverage. This is an add-on policy with a lower premium and high coverage limit that provides flexibility in deductibles and can be a great choice if you feel that your current sum insured or coverage amount is insufficient. 

3) Super Top-up:

A Super Top-up plan covers the total amount of all hospitalisation bills in the policy period, above the deductible amount. After the deductible is paid, the Super Top-up plan becomes active for all subsequent claims, just like a base plan in one policy period. Unlike a Top-up plan, there is no limit at a particular claim level, once the deductible threshold is crossed. This plan functions at a cumulative level and becomes effective once the first portion of the deductible is covered by the base health plan. Thereafter, the super top-up coverage becomes active for further claims once your deductible is paid/exhausted in a policy year. 

As can be understood, it is advisable to align the policy period of your base policy and super top-up policy. It means if your base health policy’s coverage period is from 15 January to 14 January every year, you should buy your top-up policy in a similar period to avoid any claim-related hassles.

What does an ideal health insurance cover look like?

A health insurance portfolio will differ based on an individual's age, needs, and budget. Age is an important parameter based on which the amount needed for health insurance coverage is determined. When someone is young and in good health, the need for higher health cover will be minimal but this will increase as people grow old and become more prone to diseases & ailments. Thus, additional coverage can be arranged in the form of a top-up or super top-up health insurance plan. It is important to understand that getting adequate & comprehensive health insurance is recommended when you are young & fit, otherwise, health Insurance companies won’t give health insurance cover when you are old & unfit or develop a medical condition. 

There is no scientific formula to get ideal health insurance coverage. However, the following age-wise categorisation of plans and the minimum coverage necessary can serve reference purposes.

1. For ages 18-30 years, a Base Policy of 5 lakh + Super Top-up of 5 lakh 
2. For ages 31-45 years, a Base Policy of 5 lakh + Super Top-up of 10 lakh 
3. For ages 45 years and above, a Base Policy of 5 lakh + Super Top-up of 25 lakh. A Senior Citizen Policy can also be taken once the person becomes eligible.

Ideally, one should choose a comprehensive portfolio with a coverage of Rs. 50-60 lakhs that includes add-ons like OPD, routine health checks, maternity coverage, etc. But adding these features to your portfolio requires shelling out a larger premium. Therefore, a person on a tight budget should pick a base cover of at least Rs. 5 lakh along with some significant add-ons like the NCB (Non-claim bonus) and restore benefits. Although this will increase your basic coverage premium, it can still be an ideal way to improve your coverage with minimal costs. While planning, one should also keep in mind that the premium for health insurance increases due to age and medical inflation. Hence, you should make the necessary provisions while planning your health insurance portfolio. 

In addition, there are other factors, such as location, that may have an impact on your portfolio. The needed coverage for a person/ family would be higher than that of Tier 2 or Tier 3 cities in this case since Tier 1 cities have high medical costs and lifestyle diseases are more likely to affect an individual. There might also be a case to protect yourself from specific diseases if you are prone to the same or have a family history. In such a case, you should ensure that your policy covers any of such likely diseases. Moreover, in case of pre-existing diseases, you should check the waiting period and the degree of coverage provided by the policy. 

Keeping these things in mind as you plan for your health insurance portfolio becomes crucial. Although one person cannot comprehend all of these nuances, it is thus important to engage an insurance advisor for a portfolio of health insurance that is specifically outlined.

Bottom Line

Usually, health insurance policies are upgraded every 2-3 years by the insurance providers and new features are added to them. As one needs to stay updated with the new technologies & skills, in a similar way, we may need to upgrade our health insurance as well. Either by paying the same premium or a few hundred more, you can upgrade your health cover to a much more comprehensive & feature-rich policy. The cost of health services has increased as a result of the advancements in the treatment of numerous ailments and disorders. And, this rising cost of medical care has further heightened the necessity for health insurance.