This year, IRDAI has introduced a series of significant updates to both health and term insurance policies, aiming to offer better protection and more consumer-friendly features. These updates address some important areas, such as the duration of the waiting period for pre-existing diseases, premium stability, waiting periods, free look periods, and surrender value calculations, among others. Let’s take an in-depth look at them:

IRDAI Updates for Health Insurance Plans: 2025 Update

  1. Pre-Existing Disease (PED) Definition 
    • Old Regulation: A pre-existing disease (PED) was defined as any condition diagnosed within 4 years from the policy's commencement date. 
    • New Regulation: The updated definition has reduced this time frame to 3 years. This means that if a policyholder has a medical condition diagnosed within the 3 years before purchasing a health insurance policy, it will be considered a pre-existing disease. This change benefits policyholders by potentially shortening the time they need to wait for coverage of pre-existing conditions, making it easier for them to claim benefits. 
    • Explanation: Pre-existing conditions are often subject to waiting periods before coverage begins. By reducing the period from 4 to 3 years, IRDAI has made it more accessible for individuals to receive treatment for their existing conditions sooner, minimising out-of-pocket expenses. However, we advise folks to declare all PEDs to the best of their knowledge as far as they can remember.
  1. Pricing and Premiums 
    • New Regulation: The new guideline states that once a premium is fixed for a particular policy term, it cannot be increased during that term. Additionally, insurers can now offer premium payment options in instalments, making it easier for customers to manage their finances. 
    • Explanation: This ensures that policyholders are not surprised by sudden increases in their insurance premiums during the policy term. The instalment option also makes it more convenient for individuals who may not want to pay the entire premium amount upfront, thus making health insurance more affordable.
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  1. Upper Age Limit
    • Old Regulation: Policies could set an upper age limit for entry, often excluding senior citizens. 
    • New Regulation: IRDAI has mandated that insurers must offer at least one health insurance policy with no upper age limit. This ensures that even elderly individuals can access health insurance without being restricted by age caps. 
    • Explanation: This change opens up the market for senior citizens, allowing them access to much-needed comprehensive health insurance plans without worrying about age limitations.
  1. PED & Specific Illness Waiting Period 
    • Old Regulation: The waiting period for pre-existing diseases could go up to 4 years, while specific illnesses often have a waiting period of 2-3 years. 
    • New Regulation: IRDAI now requires that both pre-existing diseases and specific illness waiting periods cannot exceed 3 years. These waiting periods are often applied to chronic conditions such as diabetes, hypertension, or heart disease and specific ailments such as cataracts, hernia or knee replacement surgery. 
    • Explanation: This harmonisation of waiting periods means policyholders will have faster access to benefits for both pre-existing diseases and specific illnesses listed in the policy wordings. By setting a maximum limit of 3 years for these conditions, policyholders can have a clearer expectation of when they will be eligible to make claims for treatments related to these ailments. 
  1. Moratorium Period 
    • Old Regulation: The moratorium period was set at 8 years, with unclear guidelines regarding porting and migrating policies. 
    • New Regulation: The moratorium period has been reduced to 5 years, and it now applies to both porting (moving from one insurer to another) and migration (shifting from one plan to another within the same insurer). 
    • Explanation: This reduction means that if a policyholder has maintained their policy for 5 years, the insurer cannot reject future claims on the grounds of non-disclosure of any pre-existing condition. It adds an extra layer of protection to the insured by simplifying the claim settlement process after the moratorium period. 
  1. Reduction/Removal of Loadings at Renewal 
    • Old Regulation: During policy renewals, there was no provision to reduce or remove the loading charges (additional charges added to premiums due to higher risk). 
    • New Regulation: Insurers cannot impose fresh underwriting or call for medical examinations at the renewal stage unless there is a request for an increase in the sum insured. Furthermore, if there is an improvement in the policyholder’s risk profile, the insurer should consider reducing or removing the loadings. 
    • Explanation: This is a significant consumer-friendly update. If a policyholder's health improves over time, they might benefit from reduced premiums at renewal. This incentivises maintaining a healthy lifestyle and promotes fairness in premium pricing.
  1. Migration 
    • Old Regulation: Migration options for health insurance policies were not clearly defined and often depended on the insurer’s underwriting team. 
    • New Regulation: Now, all health insurers must allow policyholders to migrate to another health insurance product with the same sum insured and benefits. This is applicable to indemnity-based health insurance policies but excludes personal accident and travel insurance. 
    • Explanation: Migration ensures that policyholders can shift to a different plan that better suits their needs without losing their benefits or coverage continuity. This encourages healthy competition among health insurers, which will ultimately benefit the customer.
  1. Porting Your Health Insurance Policy
    • Old Regulation: There were no uniform regulations for porting health insurance policies from one insurer to another. 
    • New Regulation: Policyholders can now port their health insurance policies from one insurer to another without losing the benefits (such as waiting periods) and coverage of their existing policy. This is applicable to all indemnity-based health insurance plans. 
    • Explanation: This change allows customers to move their policies across insurers seamlessly, ensuring that they do not have to restart their waiting periods or lose out on any accumulated benefits. It increases competition among insurers to offer better services and products. 
  1. Free Look Period in Health Insurance
    • Old Regulation: The free look period varied from 15 to 30 days, depending on how the policy was purchased. 
    • New Regulation: IRDAI has standardised the free look period to 30 days for all policies, regardless of the purchase channel. 
    • Explanation: A longer and uniform free-look period allows policyholders more time to go through the policy's terms and conditions. It gives them the option to cancel the policy without penalties if they find it unsuitable within this period. Do note that premiums received as refunds could have deductions towards any medical tests or proportionate coverages applied.
  1. AYUSH Coverage 
    • Old Regulation: Insurers often imposed sub-limits on AYUSH (Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy) treatments. 
    • New Regulation: AYUSH treatments are now covered up to the full sum insured, without any sub-limits on expenses. However, the range of treatments covered under AYUSH remains unchanged. 
    • Explanation: This expansion of AYUSH coverage means that policyholders can now avail themselves of comprehensive treatment options under traditional and alternative medicine systems without worrying about sub-limits. This promotes holistic healthcare, encouraging more people to opt for these beneficial treatments.
  1. Premium Increase for Senior Citizens
    • Old Regulation: Earlier, insurers could increase the premiums for senior citizens every year without a specific cap. This often led to a significant hike upon policy renewal and made it difficult for older policyholders to continue their coverage in an affordable manner.
    • New Regulation: The IRDAI now mandates that any premium increase for senior citizens cannot exceed 10% at renewal. This ensures that insurance companies cannot impose steep hikes in the premium, making the premiums more predictable, especially for older policyholders. Any increase over 10% must be consulted with the IRDAI first.
    • Explanation: This change provides financial relief to senior citizens, who often face rising healthcare costs. By capping premium increases, the IRDAI ensures that older policyholders can maintain their coverage without worrying about excessive hikes.
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IRDAI Updates for Term Insurance Plans

  1. Premiums for the Base Term Plan and Riders
    • Old Regulation: Earlier, Insurers could revise the premiums for riders over time or upon renewal as there was no strict requirement to keep premiums unchanged for the entire policy term.
    • New Regulation: IRDAI now mandates that once a premium is fixed for any riders. Similar to the base plan, it must remain constant for the entire policy tenure.
    • Explanation: By having a static premium rate, you, as a policyholder, can now anticipate your future financial commitments without worrying about increasing costs. However, as a consequence of this, a lot of insurers have reduced the tenure of their health-related riders, such as those with critical illness and waiver of premium, because they are unable to guarantee their premiums for a long time.
  1.  Special Surrender Value Calculation
    • Old Regulation: The calculation of surrender value for limited-pay term plans often yielded lower returns for policyholders, making early exits costly.
    • New Regulation: IRDAI has revised the formula for special surrender value, resulting in a higher surrender value for limited-pay plans.
    • Explanation: By improving surrender value calculations, the IRDAI seeks to provide a fairer approach to those who no longer want to or can continue their policies. Policyholders benefit from recouping a more substantial portion of their premiums, reducing the financial impact of having to walk away from their coverage before its term ends.
  1. Customer Information Sheet for Term Insurance
    • Old Regulation: Earlier, a Customer Information Sheet (CIS) was mandated only for health insurance policies, offering a simple summary of all the policy terms and conditions.
    • New Regulation: The IRDAI has now expanded the requirement for a Customer Information Sheet (CIS) to life insurance policies as well. This ensures that policyholders receive a clear and concise summary of the policy's most important terms and conditions.
    • Explanation: By extending the CIS to term insurance as well, the IRDAI makes it easy for policyholders to understand their policy terms without having to go through lengthy legal documents. This improves transparency and helps you make more informed decisions about your policy. This also reduces the chances of disputes arising from unclear policy wordings written in legalese.
  2.  Free Look Period in Term Insurance
    • Old Regulation: The free look period previously ranged from 15 days (for offline purchases) to 30 days (for online purchases), creating inconsistencies based on the channel through which the policy was bought.
    • New Regulation: IRDAI has standardised a 30-day free look period across all purchase channels for term insurance policies.
    • Explanation: A consistent and extended free look period will let you scrutinise your policy documents thoroughly. If you are not satisfied with the terms and conditions, you can opt-out within 30 days without incurring penalties.

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IRDAI Updates for Term and Health Insurance in 2025

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Conclusion

These updates brought forth by the IRDAI highlight the regulator’s efforts to make health and term insurance more accessible, fair & transparent. They simplify and standardise both health & life insurance and promote uniformity. This ultimately strengthens consumer trust in insurers, as well as the ombudsman.