🛡️ Pre-existing Diseases and Health Insurance in India: Transparency, Trust, and Policy Choices

 🛡️ Pre-existing Diseases and Health Insurance in India: Transparency, Trust, and Policy Choices

— A Governance and Ethics Blog for UPSC Aspirants by Suryavanshi IAS

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🧭 Why this Topic Matters

In a country where out-of-pocket health expenses account for over 55% of total health expenditure, understanding the framework of health insurance, especially regarding pre-existing diseases (PEDs), becomes vital. This topic touches upon:

• Governance (Insurance Regulation – GS Paper 2)
• Economic vulnerability and welfare delivery (GS Paper 3)
• Legal and ethical principles (utmost good faith – GS Paper 4)

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🧬 What is a Pre-Existing Disease (PED)?

According to the Insurance Regulatory and Development Authority of India (IRDAI) guidelines (2024 update):

A PED is a disease or condition diagnosed by a recognised doctor within 36 months prior to the purchase of a health insurance policy.

Examples include:

• Chronic illnesses: Diabetes, asthma, thyroid, high BP, cholesterol
• Past interventions: Surgery, heart attack, epilepsy
• Orthopaedic conditions: Lumbar disc issues
• Others: Piles, epilepsy

✳️ Note: Minor illnesses like cold, fever, and routine consultations do not qualify as PEDs.

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📑 Legal Foundation: The Principle of 'Utmost Good Faith'

All health insurance contracts are built on uberrima fides—the principle of utmost good faith.

🔹 Policyholder's Duty:
Disclose all relevant facts—especially PEDs—while buying the policy.

🔹 Insurer's Duty:
Offer terms based on transparent disclosures, including waiting periods and exclusions.

❗ If a policyholder withholds information, the insurer is legally permitted to reject the claim or cancel the policy, rendering all paid premiums null and void.

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⏳ Waiting Period and PEDs: What Aspirants Should Know

Term	Definition	Common Duration
Waiting Period	The time after buying the policy during which PEDs are not covered	2–3 years in most policies
Riders	Add-ons that reduce the waiting period	Often reduce to Day 1 coverage
High-Premium Plans	Some insurers offer Day 1 PED coverage without riders	Premiums are significantly higher

Recommendation: Always assess the waiting period and coverage terms before selecting a health insurance plan.

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💰 The Co-Payment Clause: Hidden Cost-Sharing

• Co-payment means the policyholder pays a portion (usually 10–30%) of the treatment cost.
• Example: On a ₹1 lakh bill, if there is 20% co-pay, the insured pays ₹20,000.

🧠 Insight from Experts: Policies without co-pay clauses are financially safer, especially for chronic conditions like diabetes or heart issues.

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🧾 Policy Literacy: A Pillar of Economic Security

In India, insurance literacy remains low, leading many individuals to:

• Misunderstand coverage,
• Hide medical history to reduce premiums, and
• Face claim rejections during critical medical needs.

This reflects the urgent need for:

• Public awareness campaigns,
• Simplified insurance products, and
• Stronger enforcement of insurance disclosure norms.

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⚖️ UPSC Linkages: Governance, Ethics & Policy Design

GS Paper 2 (Governance)

“Examine the role of regulatory frameworks like IRDAI in ensuring health coverage and policyholder protection in India.”

GS Paper 3 (Economic Security)

“Discuss the impact of low insurance penetration and claim rejections on the financial health of middle- and low-income households.”

GS Paper 4 (Ethics – Applied Case)

Case Study:
A man hides his diabetic condition while buying a family floater policy to reduce costs. After a claim is rejected, he accuses the insurer of fraud.
Q: Examine the ethical dimensions from both sides. What should be the ethical conduct of the policyholder and insurer?

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✅ Key Takeaways for Aspirants

Point	Takeaway
✅ Legal Foundation	Insurance contracts rely on transparency under utmost good faith.
✅ IRDAI Guidelines	Define PEDs as conditions diagnosed within 36 months prior to policy purchase.
✅ Ethics	Withholding health information is unethical and unlawful.
✅ Strategy	Look for policies with low/no waiting period, no co-payment, and PED transparency.
✅ Policy Awareness	Educating citizens can prevent medical debt and reduce litigation in insurance claims.

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🧠 Practice Mains Question

Q. What are pre-existing diseases (PEDs) in the context of health insurance? Discuss how ethical conduct and legal disclosures influence the success of insurance claims. Also suggest ways to improve transparency and literacy among consumers.

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📘 Suryavanshi IAS – Bridging Policy, Ethics, and Governance for Future Bureaucrats