Moratorium Period in Health Insurance

The moratorium period in health insurance is a long-term protection clause under IRDAI guidelines that restricts insurers from rejecting claims due to non-disclosure or misrepresentation after a defined period of continuous coverage, except in cases of proven fraud. This is especially important for policyholders with pre-existing diseases, as it offers greater claim certainty over time. This article explains what the moratorium period means, how it works, and why it matters for policyholders.

What Is a Moratorium Period in Health Insurance?

The moratorium period in health insurance is a defined long-term duration after which insurers cannot look back into past disclosures, which is why it is also referred to as a look-back period. As per IRDAI guidelines, once eight (now 5) continuous years of coverage are completed, claims cannot be denied due to non-disclosure or misrepresentation related to pre-existing conditions, except in cases of proven fraud or permanent exclusions stated in the policy. This provision is uniformly applicable across all health insurers in India under regulations issued by the Insurance Regulatory and Development Authority of India.

IRDAI Guidelines on Moratorium Period

• The Insurance Regulatory and Development Authority of India regulates and standardises the moratorium period to protect long-term health insurance policyholders

• The moratorium period has been reduced from 8 years to 5 years in 2024, making claim protection available sooner (Source - IRDAI Know Your Policy)

• It is mandatory for all health insurers in India to ensure uniform application across the industry

• Continuous policy renewal without any break is required for the moratorium period to apply

• The guideline applies to both individual and family floater health insurance policies

• Policy portability or migration does not reset the moratorium clock, provided coverage remains continuous

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Purpose of Moratorium Period in Health Insurance

The moratorium period exists to balance insurer risk management with long-term policyholder protection under IRDAI regulations. It discourages misuse and promotes honest disclosure while preventing insurers from unfairly rejecting claims after years of continuous coverage. Overall, it builds long-term trust and encourages early and sustained participation in health insurance.

How Does the Moratorium Period Work in Health Insurance?

Here's how the moratorium period works in health insurance, at each stage:

1. At the Time of Policy Purchase

At the time of buying a health insurance policy, the proposer is required to disclose all material health details for underwriting. Based on this, insurers may impose pre-existing disease PED waiting periods, typically ranging from 1 to 3 years, ask for medical tests, or apply specific terms. During this phase, non-PED treatments are generally covered as per policy conditions.

2. During the Moratorium Period

Once the policy is active and renewed continuously, the moratorium clock starts. Claims related to PEDs may be payable after the applicable waiting period, but insurers can still examine past disclosures and question claims if there is suspected misrepresentation or non-disclosure.

3. After the Moratorium Period Ends

After completion of the moratorium period as defined by Insurance Regulatory and Development Authority of India, insurers cannot deny claims on grounds of past non-disclosure or misrepresentation. Claims can only be contested in cases of proven fraud or permanent exclusions explicitly stated in the policy.

Duration of Moratorium Period in Health Insurance

Earlier, the moratorium period in health insurance was 8 continuous years, after which insurers could not question past disclosures except in cases of fraud. As per updated guidelines issued by the Insurance Regulatory and Development Authority of India in 2024, this duration has now been reduced to 5 continuous years, allowing policyholders to receive long-term claim protection sooner, provided the policy is renewed without any break.

Difference Between Moratorium Period & Waiting Period in Health Insurance

The waiting period and moratorium period serve different purposes in a health insurance policy and operate at different stages of coverage.

• Waiting Period

The waiting period is a predefined duration during which specific treatments or pre-existing diseases are not covered under a health insurance policy. During this time, claims related to these conditions are not admissible, as the waiting period directly restricts coverage.

• Moratorium Period

The moratorium period is a long-term protection clause that limits an insurer’s right to reject claims after continuous policy coverage. Once this period ends, claims cannot be denied due to past non-disclosure or misrepresentation, except in cases of proven fraud or permanent exclusions.

Difference Between Moratorium Period & Look-In Period in Health Insurance

The differences between a Moratorium Period and a Lock-in Period are:

What Is Considered Fraud Under the Moratorium Clause?

Even after the moratorium period ends, insurers can reject claims if there is proven fraud, as the moratorium does not protect deliberate or intentional wrongdoing. Fraud involves actions taken with the intent to deceive the insurer, not genuine or accidental mistakes.

• Active concealment

Knowingly hiding important medical information while purchasing the policy

• False declarations

Providing incorrect or untrue health details in the proposal form

• Manipulated documents

Submitting altered or fabricated medical reports or bills

• Intentional misrepresentation

Deliberately misstating facts to obtain policy benefits

• Innocent omission vs fraud

Unintentional or honest omissions are protected after the moratorium, while deliberate deception is not

Does Increasing Sum Insured Reset the Moratorium Period?

Increasing the sum insured does not reset the moratorium period for the existing base cover. However, a fresh moratorium period applies only to the enhanced sum insured, counted from the date of increase, as per guidelines issued by the Insurance Regulatory and Development Authority of India.

Source

Who Is Eligible for Moratorium Period Benefits?

Any policyholder who maintains continuous health insurance coverage without a break is eligible for moratorium period benefits. The benefit applies to both individual and family floater policies, including cases of portability or migration, provided continuity is maintained as per Insurance Regulatory and Development Authority of India guidelines.

How to Benefit Fully from the Moratorium Period?

Following these practices helps maximise long-term claim protection under guidelines issued by the Insurance Regulatory and Development Authority of India.

• Buy health insurance early to start the moratorium clock sooner

• Disclose all medical details honestly at the time of policy purchase

• Ensure continuous policy renewal without any breaks

• Review your policy periodically, especially after sum insured enhancements

• Clearly understand permanent exclusions, sub-limits, co-payments, and deductibles stated in the policy

Conclusion

The moratorium period is a powerful long-term consumer protection mechanism that ensures greater claim certainty for policyholders who maintain continuous health insurance coverage. It rewards early planning, honest disclosure, and policy consistency, while strengthening trust between insurers and policyholders by limiting unfair claim rejections over time.

Reference - https://irdai.gov.in/document-detail?documentId=394691

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