According to the 2019 Insurance regulatory development authority of India – National health authority joint working group’s report on fraud control:

“Fraud shall mean and include any intentional deception, manipulation of facts and/or documents or misrepresentation made by a person or organization with the knowledge that the deception could result in unauthorized financial or other benefit to herself/himself or some other person or organization”.

What does fraud have to do with you owning a health insurance policy?

One of the parties involved in health insurance fraud could be the “beneficiary” of the policy.

Obtaining insurance coverage through misrepresentation, non-disclosure of facts and/or making false/ exaggerated claims, colluding with providers also denotes fraud.

One way of avoiding this is for the proposed beneficiary to do full and complete disclosure of facts while applying for health insurance. Reading the policy documents before applying allows the proposer to understand the terms and conditions of the policy.

The policy taken as an example for the purposes of this article is neither a recommendation nor a review of the said policy.

How to read a health insurance policy….

Policy name issuer

The policy name and the insurance provider name are shown above.

Operating clause

Section 2 i.e., the operating clause shows the conditions of coverage e.g., minimum 24-hour hospitalization, day care, treatment at home etc. The latter two are under certain conditions and only for specified illnesses.

24hr hospitalization

Section 3.1 mentions the expenses covered on hospitalisation of the insured. The subsections a to c above will vary in different hospitals and are based on the room rent charged. Higher the room rent, higher will be these expenses.

If your new policy has a room rent cap which you breach on hospitalisation, you will have a sizeable amount to bear which won’t be covered by the insurer.

Claim procedure

The procedure for claims is detailed in section 6. In the same section, documents required for making a claim are also listed.

Exclusions PED waiting period

Section 7 mentions the exclusions of this policy i.e., pre-existing disease waiting period, expenses and procedures that are excluded from coverage etc. Certain policies could have permanent exclusions based on conditional underwriter approval.

optional covers

These are optional covers which increase the premium. Opt for them only if required.

disclosure by insured

These standard terms mention the disclosure to be done by the insured and conditions under which the policy could be forfeited. This section also details what would constitute fraud, condition for renewal, portability etc.

geography loadings

Section 9 mentions the geographical coverage under this policy and the maximum loadings that could be applicable during underwriting of this policy.

Premium calculation

This section mentions the basis for premium calculation based on the insured’s city of residence. This policy does not charge a co-payment on a tier-2 resident avails treatment in a tier-1 town.

However, certain health insurers do charge co-pay for availing treatment in a different zone or tiered city than the respective zone/tier of residence of the proposer/insured.

excluded items

This annexure lists all items like disposables etc which are excluded from coverage.

Policy documents can run to 40-50 pages or more. It is a pain but reading it is absolutely necessary. Policy wordings can either be downloaded from the insurer’s website or through IRDAI’s website.

To summarise this article:

✔ Disclose all information truthfully including pre-existing illnesses while applying for health insurance.

✔ Read the policy wordings of the 3-4 policies that you have shortlisted. Don’t depend on the agent or an e-commerce website for information.

✔The more policies you read the easier it becomes.

✔Optional covers are optional. Don’t pay for them unless you need them.




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