What Is Moratorium Period in Health Insurance?

Medical coverage is generally viewed as the financial shield in case of medical emergencies. However, to avoid surprises at the time of claim settlement, knowing the finer print of the policy contract is crucial. One such clause that is lesser known but extremely critical is the clause on the Moratorium Period. Although it sounds similar to waiting periods, the moratorium period serves a completely different purpose in health insurance.

In this blog we explore this topic in detail, including what the IRDAI (Insurance Regulatory and Development Authority of India) regulations are on it and what it means for policyholders like you

Moratorium period explained

Moratorium is a specified period (normally 60 months of continuous cover) after which your insurance coverage cannot be disputed by the insurer on the grounds of non-disclosure or misrepresentation (unless they can show that you deliberately committed a fraud). Hence, as a policyholder, once your insurance policy crosses the moratorium period without a break, the insurer cannot deny your claims on the basis of reasons such as a pre-existing disease that was not disclosed, even if you did forget to mention that at the time of buying the policy. It’s also a strong consumer protection policy to protect long-term policyholders from unnecessary examination or revaluation after many years of continuous coverage.

Why do insurance companies include a moratorium period?

From the insurer’s perspective, underwriting — or risk evaluation — relies heavily on the accuracy of the information provided by the customer at the time of buying the policy. However, in many cases, due to either oversight or deliberate concealment, certain health details may be omitted. To manage this risk while also offering customers a path to long-term claim security, insurers implement a moratorium period. This mechanism encourages transparency at the policy issuance stage but also sets a clear boundary, after which retrospective medical scrutiny is no longer permitted (except for fraud).

The moratorium period serves three key purposes:

• Risk Management: It provides insurers with a timeframe to observe claim patterns and assess the risk profile of the insured.
• Encouraging Transparency: Knowing that non-disclosures can lead to claim denials within the moratorium period motivates policyholders to be honest in their declarations.
• Consumer Protection: Post the moratorium period, policyholders gain assurance that their claims won’t be denied for past non-disclosures, fostering trust in the insurance system.

In essence, the moratorium period acts as a buffer period for insurers to evaluate claim patterns and history and a consumer safeguard that rewards policyholders for staying continuously insured and honest in disclosures.

IRDAI Regulations on Moratorium Period

Recognising the importance of customer protection, the IRDAI has made the moratorium period a mandatory feature in all individual and family floater health insurance policies through the IRDAI (Health Insurance) Regulations, 2016 (and subsequent amendments) and in 2024 where the moratorium period was reduced from 96 months to 60 months

Key IRDAI Guidelines on Moratorium periods

• Duration: A moratorium period of eight 60 continuous months is mandated from the date of inception of the policy.
• Scope: Once this 60 month (5 year) period is completed without breaks (except as allowed under portability or grace period rules), no health insurance claim can be challenged on the grounds of non-disclosure or misrepresentation, except in cases of fraud.
• Applicability: Moratorium period regulations apply to all types of indemnity-based health insurance plans. Moratorium period applies per policyholder and per policy, not family-wide unless it’s a floater plan with joint coverage from inception.
• Fraud Exception: If the insurer can conclusively prove fraud, then they can still deny a claim or cancel the policy even after the moratorium period ends.
• Continuity across insurers: If a policy is ported to another insurer, the moratorium continues as long as the policy continuity remains unbroken. The IRDAI introduced this provision to improve policyholder confidence and reduce future claim disputes due to old underwriting data.

Impact of moratorium period on policyholders

The moratorium period offers significant long-term security to customers, especially those who maintain continuous coverage and avoid fraudulent disclosures. Moratorium period acts as a customer shield in the following key ways.

• Enhanced Protection Over Time: After 60 months (5 years) the insurer cannot reject claims on grounds like “you didn’t tell us about this illness earlier” — unless it is a proven case of fraud. This is especially reassuring for older policyholders or those with chronic illnesses.
• Better Claim Settlement process: Long-term policyholders who meet moratorium criteria often enjoy faster and less-contested claim approvals, as the insurer cannot legally reopen old disclosure gaps.
• Clarity on Legal Standing: Policyholders gain a clear sense of legal protection and can challenge insurers if claims are wrongly denied post-moratorium.

How can customers maximize the moratorium period to their maximum advantage?

The moratorium period is beneficial, but to take full advantage of it, customers need to understand its terms and fulfill a few key responsibilities.

• Disclose Everything Honestly: Even if you think a minor surgery or condition doesn’t matter, mention it in your proposal form. This reduces chances of dispute during the 8-year moratorium build-up period.
• Don’t Let Policy Lapse: Even a short break in renewal could restart the moratorium clock. Use auto-renewal features and always renew within the grace period.
• Keep Track of Policy Duration: Once you complete 60 months of uninterrupted years with the same insurer (or across ported policies), make a note — this gives you claim leverage if any issue arises.
• Maintain Records: Keep medical documents, policy copies, and communication with insurers safe — especially from the early years. This helps defend your claim if needed.
• Ask for Clarification: While buying a policy, specifically ask your insurer or agent about moratorium period conditions, and ensure they are documented in your policy terms.

Conclusion

The moratorium period is a significant consumer-friendly feature in Indian health insurance. It balances the insurer’s risk with the customer’s right to long-term protection. Once you cross the 8-year threshold with an honest and uninterrupted policy, you’re largely shielded from rejection based on technicalities like omitted disclosures.

Yet, this safety net only works when policyholders play their part — by being honest, consistent, and informed. Understanding your moratorium period is not just legal literacy; it’s your shield in securing the promise that your health insurance makes.