IRDAI’s Five-Year Rule Protects Health Insurance Claims From Arbitrary Rejection

Health insurers cannot ordinarily reject claims over non-disclosure once a policy completes five years of continuous coverage.

The Insurance Regulatory and Development Authority of India (IRDAI) has reduced the moratorium period for health insurance policies from eight years to five years, strengthening protection against claim rejection over alleged non-disclosure or misrepresentation. The revised provision, introduced in 2024, limits an insurer’s ability to contest policies and claims after 60 months of continuous coverage, except in cases of established fraud.

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What Is the Five-Year Moratorium Rule?

The moratorium period is a regulatory protection that restricts insurers from questioning a health insurance policy or rejecting claims on grounds of non-disclosure or misrepresentation after five continuous years. IRDAI initially introduced an eight-year moratorium in 2019 before reducing it to 60 months in 2024.

The provision applies to both fixed-benefit policies, which provide predetermined payments for covered illnesses, and indemnity-based policies, which reimburse eligible hospitalisation expenses. Existing policy conditions, including the sum insured, co-payments, deductibles and sub-limits, continue to apply. The protection also extends to policyholders who migrate or port their policies, with the completed period of continuous coverage counted towards the five-year requirement.

How Does the Rule Protect Policyholders?

Under the revised framework, insurers ordinarily cannot reject claims after the moratorium period by alleging that a policyholder failed to disclose a pre-existing medical condition. Conditions such as diabetes or hypertension have frequently been cited in disputes involving disclosure of medical information during policy purchases.

The regulation also restricts insurers from contesting policies on grounds of misrepresentation once the prescribed period has elapsed. Previously, such disputes could result in claim repudiation or policy cancellation over alleged suppression of material information. The five-year provision provides policyholders with stronger protection against these decisions, particularly when premiums have been paid regularly and coverage has remained continuous.

Can Insurers Still Reject Claims After Five Years?

The moratorium does not guarantee settlement of every insurance claim. IRDAI regulations allow insurers to contest policies and claims where fraud has been established. However, the responsibility for proving fraud rests with the insurance company rather than the policyholder.

Policyholders whose claims are rejected after completing five years of continuous coverage have stronger grounds to challenge decisions based on alleged non-disclosure or misrepresentation. Such disputes can be taken before the insurance ombudsman or other grievance redressal forums. The provision strengthens consumer protection while preserving insurers’ ability to act against established fraud and apply legitimate policy conditions.