Waiting period in health insurance

What is a waiting period in health insurance?

A waiting period is a stretch of time, counted from the start of a health policy, during which certain illnesses or treatments are not covered. Once the policy has been renewed without a break for that period, those claims become payable. Waiting periods protect the insurer against people buying cover only when they already expect a claim, a problem known as adverse selection.

Health policies in India usually carry three kinds of waiting period, and the Customer Information Sheet given with every policy must list each one.

How waiting periods work in India

The IRDAI (Insurance Products) Regulations, 2024, in force from 1 April 2024, set the two 36-month limits. Under Schedule III, a specific waiting period is "a period up to 36 months" during which listed diseases or treatments, except those caused by an accident, are not covered. The waiting period for disclosed pre-existing diseases can be "maximum up to 36 months". Before these regulations, the pre-existing disease waiting period could run up to 48 months. Insurers are encouraged to offer shorter periods, and many products do, sometimes for an extra premium.

Other rules that affect waiting periods:

• Continuity. Waiting periods count only while the policy is renewed without a break. Renewal within the grace period, 30 days for annual premiums and 15 days for monthly instalments, keeps the credit intact.
• Portability and migration. Time already served carries over when a customer ports to another insurer or migrates to another product of the same insurer, to the extent of the earlier sum insured. See health insurance portability.
• Higher sum insured. When the sum insured is increased, waiting periods apply afresh only to the increased part.
• Existing policies. IRDAI's 2024 health master circular required existing products to be brought in line by 30 September 2024 and asked insurers to protect the waiting period credits already earned by policyholders.

Waiting periods are separate from the moratorium period. A waiting period decides when a condition becomes payable. The moratorium, after 60 months of continuous cover, decides when the insurer can no longer contest the policy for non-disclosure.

What waiting periods mean for distribution

Waiting periods produce some of the most painful claim rejections, because the customer has paid premium and still gets nothing. Most of these cases come from expectations set at the sale.

What advisers should do:

• Name the waiting periods that matter to this customer. For a 45-year-old with diabetes, the pre-existing disease wait matters more than the initial 30 days. For a couple planning a child, it is the maternity waiting period.
• Sell early, renew on time. The best way to reduce the waiting period problem is to buy cover while healthy and keep it running. A missed renewal can restart the clock. Renewal reminders before the due date are a service, not just a persistency tactic.
• Use portability instead of a fresh policy. A customer unhappy with an insurer should port, not buy new, so that credits carry over. Agents who replace policies without porting can cost customers years of waiting period credit.
• Watch employer cover. Group policies often waive waiting periods. Employees who leave and buy a retail policy start from zero unless they port, so the move should be planned before the job change.
• Explain reduced waiting period options. Some products offer a shorter pre-existing disease wait for a higher premium. For customers with conditions that will need treatment soon, the extra cost may be worth it.