We depend on health insurance companies to take care of our needs when the time comes. Failure to do so breaks the contract and the trust between the parties. If the fault lies with the insurance company, there are several mechanisms put in place to address such issues. But what happens when the policyholder doesn’t hold up their end of the bargain? One of the biggest mistakes a policyholder can make when it comes to health insurance is the incorrect disclosure of information. Here’s why disclosure of information is vital when it comes to health insurance.
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When you purchase your health insurance policy, the insurer will usually ask you to disclose certain information related to your health and medical history. These will include the following:
These questions are asked by the insurer to know your medical liabilities. It can be used to set your health insurance premiums depending on the state of your health and medical history. It therefore becomes essential that the policyholder truthfully disclose these facts without falsifying or distorting them. Failure to do so comes with consequences.
Health insurance companies have certain fundamental norms, which form the basis of their business. One such norm is the waiting period for pre-existing conditions. The waiting period has been put in place to avoid fraud and to safeguard the business interests of the insurer. Besides this, pre-existing conditions can be expensive to cover and need sustained medical care over a long period. Taking these things into account, insurers have put in place a waiting period of 1 to 3 years before they start covering pre-existing conditions. This makes coverage fair and sustainable for the insurer and the policyholder.
Pre-existing conditions can lead to higher premiums, as they require prolonged care. And those with such conditions are liable to make more claims than those who are healthy. Hence, it is risky for the insurer to undertake such policyholders without a higher premium. Some may know that declaring a pre-existing condition can lead to higher premiums, and may not declare it at the time of policy purchase. But this is not the right approach to take, as invariably the insurer will come to know about your pre-existing conditions when you raise a claim related to the ailments.
Whether intentional or unintentional, non-disclosure of information at the time of policy purchase has many detrimental consequences. Here’s what can happen.
When you don’t disclose the relevant information to your insurer, your claim can be rejected. Insurers do a thorough investigation of each claim and can find out if there is a mismatch between what was declared in the application form and the claim raised. If a mismatch is found, the insurer is well within their rights to reject the claim.
Another issue that can arise when information is not disclosed in good faith by the policyholder is policy cancellation. This will lead to financial distress, as you will incur out-of-pocket expenses without the financial protection offered by the health insurance company.
Depending on the severity of the falsification, health insurers can blacklist the policyholder. This will ensure that the policyholder will not get insurance coverage from any insurance company. Insurers can also take legal action in such cases.
While some may deliberately lie on their policy application form, others may make genuine mistakes. Here’s how to avoid such mistakes, as they can turn out to be expensive.
It is important as a policyholder to uphold your end of the deal when applying for health insurance. So, disclose accurate information to avoid being penalised and paying a hefty price down the line due to a momentary lapse of judgment or a mistake.
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Reviewed by Dr. Harshita Dahiya 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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