Every health insurance policy includes a list of exclusions, these may be specific diseases, conditions, procedures, or equipment that are not covered by the policy. If a person already has a disease at the time of purchasing the policy, the insurance company may still offer coverage, but with a waiting period for that pre-existing condition. The pre-existing disease (PED) gets covered after this waiting period ends.
However, in addition to these standard exclusions, some insurance companies may offer policies where certain diseases are permanently excluded from coverage. In this post, we will discuss what these diseases are, and why and how insurance companies offer such policies.
All insurance companies follow certain underwriting guidelines approved by their board. These guidelines help decide who is eligible for a policy, who might need to pay a higher premium (Premium loading), and whom to deny coverage. For example, if someone has diabetes, an insurance company might still offer a policy but with a higher premium. The exact loading amount that a company can charge, is usually mentioned in the policy.
However, if a person has certain serious illness/es like cancer, heart conditions, or chronic kidney disease etc. at the time of policy purchase, insurance companies may choose not to offer a policy at all. This isn’t because they’re being unfair, but because such conditions come with a high risk of future claims. Let’s understand this better through an example.
Imagine Ramesh, who has early-stage cancer and he wants to buy a health insurance policy. But insurance companies deny him health insurance policy. Why? Because from the insurer’s perspective, Ramesh is a high-risk customer. His chances of needing costly treatments in the future are significant, and those treatments are likely to be long-term and expensive. Since cancer treatment involves frequent and high-value claims, insurance companies therefore, avoid such persons. As a result, Ramesh is left without any health insurance coverage.
This kind of situation was not uncommon, where many individuals were denied coverage simply because of a pre-existing condition. To address this, the Insurance Regulator IRDAI introduced new Guidelines on Standardization of Exclusions in Health Insurance Contracts, effective from October 1, 2020.
These guidelines do not force insurance companies to cover every illness, but they do require insurance companies to offer coverage, even if a person is suffering from a serious disease (like cancer) by permanently excluding only that specific disease while still covering other illnesses and injuries. So now, Ramesh can still get a health insurance policy, but it may come with cancer listed as a permanent exclusion. That means the policy will cover him for other illnesses and injuries, but not for cancer.
Which Diseases Can Be Permanently Excluded?
The IRDAI has outlined 16 diseases or conditions in its guidelines. If a person has any of these before buying a health insurance policy, that specific disease or condition can be permanently excluded from policy coverage. However, the insurance policy will still cover other illnesses or injuries like any standard health insurance plan.
Here’s the list of such conditions:
- Sarcoidosis
- Malignant Neoplasms (cancers)
- Epilepsy
- Heart conditions (including congenital heart disease and valvular heart disease)
- Stroke (Cerebrovascular disease)
- Inflammatory Bowel Disease (IBD)
- Chronic Liver Disease
- Pancreatic Diseases
- Chronic Kidney Disease
- Hepatitis B
- Alzheimer’s and Parkinson’s Disease
- Demyelinating Diseases
- HIV & AIDS
- Hearing Loss
- Papulosquamous Skin Disorders
- Avascular Necrosis (Osteonecrosis)
Along with this list, IRDAI has also provided specific medical codes (ICD codes) to ensure clarity about what exactly is excluded.
A Few Key Points to Note:
- Permanent exclusions apply only if the person is suffering from that disease/condition at the time of buying the policy.
- Insurance companies can only exclude diseases that are on this IRDA-approved list when offering coverage to someone with such conditions.
- No other disease can be permanently excluded from health insurance policies outside this list by insurance companies.
If any of these diseases is diagnosed after purchasing a health insurance policy, the insurance company may ask for additional documents, such as previous doctor consultations, diagnostic reports, or medical history, to confirm that the illness was not pre-existing when the policy first began.
Once it’s confirmed that the disease developed after the policy started, the claim is processed, and eligible medical expenses are paid according to the terms and conditions of the policy. However, if it’s proven that the disease existed before the policy was issued, the insurance company can deny the claim and may even cancel the policy for non-disclosure of a material fact.
But Why Do Insurance Companies Avoid Covering People with These Conditions?
Even with clear regulatory guidelines, it’s still difficult for individuals with such conditions to get health insurance coverage. There are multiple reasons.
Long-Term Nature: Most of these conditions are lifelong or progressive. They require continuous treatment, regular monitoring, and ongoing care, leading to high long-term costs for insurers.
Expensive Treatments: Diseases like cancer, chronic kidney disease, or heart conditions often involve costly treatments such as chemotherapy, dialysis, major surgeries, and lifelong medication.
No Cure, Only Management: Many of these illnesses (e.g., Alzheimer’s, Parkinson’s, HIV/AIDS) have no cure. They can only be managed. Insurance companies generally prefer to cover health events that have a clear treatment path and resolution.
High Risk of Recurrence or Complications: Conditions like epilepsy or stroke can return or lead to additional complications, increasing the chances of repeated and expensive claims.
Underwriting Difficulties: It’s challenging to accurately assess the severity or stage of certain diseases like cancer or liver disease. This makes it difficult for insurers to set fair premiums or determine the actual risk involved.
Options for People Struggling to Get Health Insurance
If you’re dealing with a health condition and finding it hard to get insurance, don’t give up. First, try to get a health insurance policy, even if it excludes your pre-existing condition. It’s important to be honest with the insurance company about your medical history. Trying to hide or lie about it can lead to denial of claims or cancellation of the policy.
If one insurer refuses to cover you, don’t get discouraged. You may need to approach multiple companies to find one that will offer coverage at a reasonable price.
One option is a Top-up Health insurance policy with a high deductible. For example, you can go for a 10 lakh top-up policy with a 5 lakh deductible. This means you cover medical expenses up to 5 lakh yourself, and the policy steps in to pay above that limit.
Another option is to consider a critical illness policy. These are often easier to get than standard health insurance. While they won’t cover your existing illness, they do pay a lump sum if you’re diagnosed with a new, unrelated critical illness. Having this type of policy is better than having no coverage at all.
You can also look into disease-specific policies, such as cancer-specific plans offered by several insurance companies like New India Assurance Cancer Guard Plan, Star Health Cancer Care plan etc. Some of these may provide limited coverage even if you already have cancer.
Government schemes like Ayushman Bharat are also worth exploring, especially if you fall under the eligible category.
And finally, if none of these options work out, self-funding your medical expenses, while not ideal, may be the only route until better coverage becomes available.
