What is the recourse if insurer denies cashless treatment of cancer?

I bought a policy in December 2023 for ₹10 lakh. My wife was diagnosed with stage 4 cancer in March and underwent treatment in June. The insurer denied cashless hospitalization. What is my recourse? Would it be advisable for me to port the policy?

- Name withheld on request

Standard individual health insurance policies carry a waiting period for pre-existing diseases. Treatment for pre-existing conditions is payable only after the waiting period has lapsed. Insurers suspect non-disclosure if a major ailment is diagnosed within the first year of buying the insurance. In such cases, they would want to investigate a claim before admitting liability. Investigation is difficult to carry out in a cashless claim, as there is limited time available. That’s why the insurer may have refused cashless treatment. However, you can still file the claim for reimbursement. This would allow the insurer to investigate and then settle the claim.

Health insurance policies are lifelong renewable. Insurers cannot deny a future renewal or increase the premium due to an adverse medical history of the patient. Once a claim is admitted, it would also assure you of all future claims and a guaranteed cover of ₹10 lakh. So, it makes sense for you to continue with the existing insurer. Moreover, it is unlikely that any other insurer would issue health coverage at this stage, after cancer has been diagnosed.

To establish the genuineness of the claim, you may want to provide some supporting documents, while filing the reimbursement claim. This could include any diagnostics or health checkups that you may have conducted in the last one year. If these reports indicate a clean bill of health, your case is strengthened. Do note that in case an insurer’s investigation establishes that the ailment was diagnosed before policy issuance, the insurer may also proceed with cancellation of the policy for non-disclosure at the proposal stage.

Also Read: Beware, a financial plan that neglects insurance can leave you high and dry

If I take top-up health insurance from a different insurer than my primary insurer, would that make a difference? Is the claim process for top-up health insurance similar to regular health insurance?

Technically, coverage from top-up insurance remains the same, irrespective of the insurer. Once the policyholder has incurred claims above the deductible amount, the top-up policy gets triggered. Even if the top-up policy is with the same insurer, there will be two separate claim numbers generated – one each for the base policy and the other for the top-up policy. 

This would entail independent processing of the two claims. Further, depending on the insurer, you may be asked to submit the top-up claim after the base policy claim has been made. The only advantage of keeping both the policies with the same insurer could be a small administrative benefit. While settling the claim for the top-up policy, the insurer can refer to the base policy claim internally for additional information. This may lead to marginal time savings.

The claim process for top-up health insurance is similar to that of the base policy, with a small difference. In the case of the top-up plan, the policyholder needs to show that the claim amount is over and above the deductible amount. So, they must submit the claim settlement letter for the base policy claim. If the person does not have a base policy, then they can show the receipts for expenses incurred to meet the deductible threshold.

(Abhishek Bondia is Co-founder & Principal Officer at SecureNow Insurance Broker)