What is PED in Health Insurance: A Guide for Indian Consumers

A five-year study by Aakash Healthcare, Delhi, reported that 50% of heart attack cases since 2020 have been among adults below 40. This stat shows how fast-paced routines, poor eating habits, rising stress levels, and lack of physical activity are making people fall sick more often and much earlier in life.

As medical costs continue to climb, health insurance has become a must-have, not just for emergencies, but for long-term financial security. And when it comes to choosing the right health insurance plan that covers conditions like diabetes, asthma, and cardiac illnesses, answering questions like, What is PED in health insurance? How it impacts your policy?, and what you must do as a responsible buyer? is crucial.

Pro tip: The health insurance market can be a labyrinth. Instead of spending hours navigating through the hundreds of policies out there, why not book a 30-minute call with our expert IRDAI-certified advisors? We don’t spam or pressure you to buy. Just honest insurance advice.

What is PED in Health Insurance: Overview

What is Pre-Existing Disease (PED) in Health Insurance?

According to the Insurance Regulatory and Development Authority of India (IRDAI), a condition is considered a Pre-Existing Disease (PED) if it was diagnosed by a physician or if medical advice or treatment was received for it within 36 months before the start of the health insurance policy or its reinstatement. (This duration was previously 48 months but was reduced to 36 months by IRDAI, effective April 1, 2024.)  Essentially, if a health issue existed or was known to you before you bought the insurance, it's categorized as a PED.

Pre-existing diseases (PEDs) must be disclosed when buying health insurance, as most policies have a waiting period of 2 to 3 years before coverage for these conditions begins. Failure to declare a PED can lead to claim rejection or even cancellation of the policy. That’s why full disclosure and a clear understanding of PED-related rules are essential for hassle-free claim approval.

Unlike a new illness or accident that occurs unpredictably after the policy begins, a PED is a pre-identified condition with a history of symptoms, diagnosis, or treatment. This means conditions like diabetes, high blood pressure, thyroid, hypertension, asthma, or chronic back pain. 

Why Do Insurers Care About PEDs?

Health insurance works on the idea of risk sharing. Many people pay premiums, but only a few actually need expensive treatments. The money collected from healthy individuals helps cover the medical costs of those who fall sick. For this system to work, insurance companies need to keep the overall risk balanced.

However, some insurers now offer health insurance plans that provide coverage for pre-existing diseases from day one.

Pre-Existing Diseases (PEDs) create a challenge in this balance. People with existing health problems are more likely to use their insurance right away, which increases the cost for insurers. That’s why PEDs are a big concern. Mainly for two reasons: risk assessment and preventing misuse.

1) Risk Assessment

• Higher chances of claims: People with PEDs, like diabetes or heart issues, are more likely to need regular medical care, hospital visits, and treatments. This means they are more likely to file claims than someone with no known health issues.
• Difficult to predict costs: Insurers use actual data and calculations to guess how many claims will come in. But if too many people have PEDs, it becomes harder to predict future costs accurately, which can hurt the company’s ability to pay claims smoothly.
• Higher treatment expenses: Chronic illnesses often need ongoing care: regular doctor visits, tests, medications, or even surgeries. Covering these costs right away, without proper checks like waiting periods, would make the business unsustainable for insurers.

2) Preventing Misuse (Adverse Selection)

• What is adverse selection? It’s when people who are already sick are more likely to buy health insurance, while healthier people avoid it. Especially if premiums are high. If this continues, only people with serious health problems remain in the pool.
• Why it’s a problem: When mostly sick people buy insurance, the cost of claims goes up. To cover this, insurers raise premiums. As a result, healthy people drop out, making the pool riskier and more expensive. This can lead to a point where the insurance system starts to break down—a situation called the "death spiral."
• To encourage long-term coverage: By imposing a waiting period, insurers encourage people to buy health insurance at an early age and maintain continuous coverage, rather than waiting to purchase it only after falling ill. This helps create a more balanced risk pool and keeps premiums more stable for everyone.

List of PEDs in Health Insurance

In India, IRDAI defines a Pre-Existing Disease (PED) not by a specific exhaustive list of ailments, but by a time-bound criterion: any condition, ailment, injury, or disease that was diagnosed by a physician, or for which medical advice or treatment was recommended by or received from a physician, within a specific period (which has recently been standardized to 36 months) prior to the effective date of the health insurance policy.

Therefore, rather than a fixed list, it's about the diagnosis or treatment history of the individual. However, based on common medical conditions and general insurance practices in India, here's a list of frequently encountered conditions that are typically classified as Pre-Existing Diseases if they meet the IRDAI's time criteria:

Common Pre-Existing Diseases (PEDs) in Health Insurance in India:

• Lifestyle Diseases:
  • Diabetes Mellitus (Type 1 or Type 2)
  • Hypertension (High Blood Pressure)
  • Hyperlipidemia (High Cholesterol)
  • Thyroid Disorders (Hypothyroidism, Hyperthyroidism)
  • Obesity (in cases where it's diagnosed as a medical condition leading to complications)
• Chronic Respiratory Conditions:
  • Asthma
  • Chronic Obstructive Pulmonary Disease (COPD)
  • Chronic Bronchitis
• Cardiovascular Conditions:
  • Heart Disease (e.g., Coronary Artery Disease, Angina)
  • Past Heart Attacks or Strokes (if diagnosed prior)
• Musculoskeletal Conditions:
  • Arthritis (various forms like Osteoarthritis, Rheumatoid Arthritis)
  • Slipped Disc / Spinal Disorders (if requiring treatment)
  • Knee or Joint Issues (especially those requiring or having undergone surgery)
• Organ-Specific Ailments:
  • Kidney Disease (including chronic kidney disease, kidney stones requiring treatment)
  • Liver Disease (e.g., Fatty Liver, Cirrhosis)
  • Gallbladder Stones (if diagnosed and requiring intervention)
  • Cataract
  • Hernia (all types)
  • Fistulae, Haemorrhoids (Piles), Fissure in Ano
• Other Chronic Conditions:
  • Cancer (any form, if previously diagnosed and treated)
  • Epilepsy
  • Lupus
  • Sleep Apnea
  • Certain Mental and Psychiatric Illnesses (if formally diagnosed and treated within the look-back period)

Important Considerations:

• Not an Exhaustive List: This list is descriptive. Any condition for which you have sought medical attention or received a diagnosis within the defined timeframe by IRDAI before buying the policy will be considered a PED.
• Minor Ailments Excluded: Common cold, flu, minor fever, or one-off infections (like dengue or malaria that have fully resolved) are generally not considered PEDs unless they led to long-term complications or a chronic underlying condition.
• Disclosure is Key: Regardless of whether you think your condition falls into this list, it is mandatory to disclose your complete medical history accurately when applying for health insurance. The insurer will then assess it against their underwriting guidelines and the IRDAI definition to classify it as a PED and apply the relevant waiting period.

Understanding the Waiting Period for Pre-Existing Diseases in Health Insurance

When you buy health insurance, especially if you have a PED, a very important term you will encounter is the "waiting period." This period is a standard part of most health insurance policies. It directly affects when your policy will start paying for treatments related to your existing health conditions.

What is a Waiting Period?

A waiting period is simply a specific amount of time that must pass after your health insurance policy starts. During this period, certain conditions or treatments are not covered. It's like a cooling-off period set by the insurer. For what is PED in health insurance, this waiting period means your policy won't pay for expenses related to your pre-declared conditions until this time has fully passed.

Typical Waiting Period Duration for PED (2-3 years)

For Pre-Existing Diseases, the waiting period can vary between insurance companies. Most insurers set a waiting period of 2 to 3 years for pre-existing diseases.

Impact on Claims During the Waiting Period

The impact of the waiting period on your claims is straightforward:

• No Coverage for PED-related Illnesses: If you require hospitalization or treatment for your declared Pre-Existing Disease during its waiting period, your health insurance policy will not cover those expenses. You will have to pay for these costs out of your own pocket.
• Policy Needs to Be Active: For the waiting period to be counted, your policy must be continuously renewed without any break. If your policy lapses and you buy a new one, the waiting period will likely restart.

The Critical Importance of Disclosing Your PEDs

When you apply for health insurance, you will be asked about your health history. Hence, understanding what is PED in health insurance and being transparent about your health history is the only way to ensure your policy truly serves as a reliable safety net.

Disclosing all your PEDs fully and accurately isn't just a suggestion; it's a must-do that protects you and ensures your policy works when you need it most.

Why Full and Accurate Disclosure is Mandatory

1. It's the Law:
   • Insurance contracts are based on "Utmost Good Faith.” This means both you and the insurer must be completely honest.
   • If you hide a PED, you are breaking this basic rule.
2. Your Policy Can Be Cancelled:
   • If the insurer finds out you didn't disclose a PED later, they can cancel your policy. This can happen even if you've paid premiums for years.
   • This means you would lose all the money you paid for premiums and be left without coverage.
3. Claims Will Be Rejected:
   • This is the biggest risk. If you make a claim for a condition that was a PED but you didn't disclose it, the insurer will likely reject your claim.
   • They might investigate your past medical records when you make a claim. If they find proof of a PED you hid, your claim will be denied. This applies even if you've completed the waiting period for that specific PED.
   • This leaves you stuck with huge medical bills, defeating the whole purpose of buying health insurance.
4. Ensures Fair Premiums:
   • Insurers calculate premiums based on your health risk. Knowing what is PED in health insurance helps them set a fair price.
   • If everyone hid their PEDs, premiums would rise for everyone, including healthy people, making insurance unaffordable for many.

Consequences of Non-Disclosure: Why Claims Get Rejected

Failing to fully and accurately disclose your Pre-Existing Diseases (PEDs) when applying for health insurance is a serious misstep with severe and often costly consequences.

1. Breach of "Utmost Good Faith":
   • Insurance contracts are built on the principle of utmost good faith. This legally binding principle means both the insurer and the policyholder must be completely honest and transparent. You are obligated to share all relevant health information, including what is Pre-Existing Disease (PED) in health insurance that applies to you.
   • When you hide a PED, you violate this fundamental principle. And this gives the insurer legal grounds to act against your policy.
2. Claim Rejection is Almost Certain:
   • This is the most direct and impactful consequence. If you file a claim for a condition that was a PED but you did not disclose it, the insurer will almost certainly reject your claim.
   • Insurers conduct thorough investigations during the claim process, especially for significant medical events. They can access your past medical records, doctor's consultations, and diagnostic reports. If these records reveal a pre-existing condition that was not declared in your proposal form, the insurer will deny the claim on the grounds of "non-disclosure of material facts."
   • This applies even if you have completed the standard waiting period. The waiting period is for declared PEDs; an undisclosed PED effectively renders that specific condition permanently excluded, or even the entire policy invalid, from the insurer's perspective.
3. Policy Cancellation and Loss of Premiums:
   • Beyond just rejecting a claim, the insurer has the right to cancel your entire health insurance policy if they discover non-disclosure of a PED.
   • In such cases, you will lose all the premiums you have paid up until that point.
4. Financial Burden Falls Entirely on You:
   • When a claim is rejected due to non-disclosure, the entire cost of treatment, including hospital bills, surgery, medication, and doctor fees, becomes your responsibility.

While there is a "moratorium period" (currently 5 years as per IRDAI guidelines effective April 1, 2024), after which an insurer generally cannot contest a policy based on non-disclosure unless fraud is proven, the safest approach is always full transparency.

How PEDs Are Handled During the Health Insurance Application Process

Now that we understand what a Pre-Existing Disease (PED) is and why it’s important to be honest about it, let’s look at what happens when you actually apply for health insurance. Knowing how insurers deal with PEDs during the application process helps you avoid surprises and makes sure you get the right coverage.

1) Proposal Form:

This is your initial application, a detailed document where you provide all personal and medical information. You typically pay the base premium at this stage.

After you submit your Proposal Form for health insurance, the insurer initiates Medical Underwriting. This critical phase is where the insurer thoroughly assesses your health profile and risk factors.

2) Medical Underwriting:

• Purpose: This is the insurer's investigative process to evaluate your medical history and determine the level of risk they undertake by offering you coverage.
• Process: They review your declared medical information, may request past medical reports, or even ask you to undergo a medical check-up. This deep dive helps them understand the implications of any Pre-Existing Diseases (PEDs) you may have, along with other health and lifestyle factors.
• Outcome: Based on this assessment, the insurer decides whether to accept your application as is, reject it, or offer you a policy with modified terms.

When the underwriting process identifies a higher risk than initially anticipated, often due to declared PEDs or other health concerns, the insurer may issue a Counter Offer.

3) Counter Offer

A Counter Offer is a revised proposal from the insurer. It means they are willing to provide you with health insurance, but with specific adjustments to your policy's terms and premium to accommodate the identified risks. You, as the customer, then have the choice to accept or reject this new offer.

The primary ways an insurer adjusts a policy through a Counter Offer are:

A. Loading Charges (Additional Premium)

1) What it is: This is an additional charge added to your standard premium to cover the increased risk associated with specific health conditions or lifestyle habits.

2) Why it's applied: It compensates the insurer for the higher probability of claims related to:

1. Pre-existing conditions: Such as controlled Blood Pressure (BP), Diabetes, Asthma, Thyroid disorders, etc.
2. Lifestyle habits: Like smoking or significant alcohol consumption.
3. Weight: If you are outside the healthy weight range, as calculated by Body Mass Index (BMI).

3) Typical Range: Loadings generally range from 10-40% of the base premium, but can increase beyond 40% depending on the severity and number of conditions.

4) Combination: If you have multiple PEDs or risk factors, these loading charges are typically combined and evaluated at the time of policy purchase.

5) Insurer Discretion: Note that some insurers might choose not to apply loading charges for certain conditions, or they might reject the application instead.

B. Permanent Exclusions on PED

1) What it is: This is a condition where coverage for a specific PED and any related complications is permanently removed from your policy. The insurer will never pay for claims related to that specific condition.

2) When it's applied: This is typically proposed for severe or high-risk PEDs where the potential for recurring, expensive claims is very high, or the condition is considered too grave for standard coverage. Examples include:

1. Past history of certain types of Cancer or tumors.
2. Severe head trauma or specific neurological conditions.
3. History of strokes with residual complications.

Example: If a person with a history of a brain stroke applies for insurance, the insurer might issue a Counter Offer that includes a permanent exclusion for brain strokes and related complications. This means any future stroke-related claims would not be paid, but the policy would still cover unrelated hospitalizations or treatments (e.g., for an infection or accident).

Alternative Products: For very severe PEDs, some insurers might choose to reject the application outright if they deem the risk too high to cover at all. Alternatively, they might offer a specialized product designed for high-risk individuals, which might come with very specific limitations.

Ditto’s Take: Choosing the Right Health Insurance Plan with PED in Mind

Once you understand what is Pre-Existing Disease (PED) in health insurance and its implications, the next crucial step is to select a policy that genuinely meets your needs.

Key Tips for Consumers: Compare Plans and Waiting Periods

The most critical factor to scrutinize when selecting a health insurance policy, especially if you have a PED, is the waiting period for pre-existing conditions.

• Shorter is Better: Typically, PEDs have a 2-3 year waiting period. Always opt for a plan with the shortest possible waiting period for your specific PEDs.
• Specific Ailment Waiting Periods: Beyond the general PED waiting period, check if the policy has specific waiting periods for certain common ailments (like cataract, hernia, joint replacement surgeries). These might be different from the main PED waiting period and are applied for 1-2 years..
• Read the Fine Print: Don't just rely on what's advertised. Always read the policy document carefully to understand the exact terms and conditions related to all waiting periods, including those for PEDs, specific diseases, and the initial waiting period for new policies.
• Also remember, any ailment diagnosed after policy purchase is covered immediately, that is the whole purpose of buying health insurance.

The Advantage of Buying Health Insurance Early

While it might seem counterintuitive to buy health insurance when you're young and healthy, it's one of the best strategies, especially regarding PEDs.

• Shorter or No PEDs: The younger and healthier you are, the less likely you are to have a diagnosed PED. This means your initial policy will likely come with standard terms and no immediate complications related to pre-existing conditions.
• Completing Waiting Periods Early: Even if you develop a condition later in life, if you already have a policy, the new condition (if it wasn't pre-existing when you bought the policy) won't be subject to the PED waiting period. If you do acquire a PED later, the clock for its waiting period starts from when you buy the policy (assuming you switch/port correctly), ensuring you complete it well before you might critically need coverage.
• Lower Premiums: Premiums are significantly lower when you are younger. As you age, not only do premiums increase, but the likelihood of developing PEDs also rises, which can further inflate your premium through loading charges or lead to permanent exclusions.
• No Underwriting Hassles: Buying early when healthy often means you bypass complex medical underwriting processes, or at least they are much simpler.
• Accumulation of Benefits: Many policies offer cumulative benefits, no-claim bonuses, or loyalty benefits that grow over time. Buying early allows you to accumulate these advantages, enhancing your coverage without extra cost.
• Building a Strong Insurer Relationship: Starting early allows you to build a track record with your insurer, helping establish a positive and reliable relationship over time. This can be beneficial when it comes to claims processing, renewals, or negotiating better terms in the future.

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Conclusion: Transparency Today, Security Tomorrow

Securing health insurance is crucial, and understanding what is PED in health insurance is fundamental to ensuring your policy truly protects you. PEDs play a major role in how your health insurance is priced, what it covers, and when coverage begins. While insurers apply waiting periods and specific terms to manage risk fairly, your best tool as a consumer is honest disclosure and early planning.

When selecting a health insurance plan with pre-existing diseases (PEDs) in mind, it’s wise to prioritize policies that offer shorter waiting periods. The earlier you buy health insurance in life, the more benefits you unlock, such as premiums are generally lower, you are less likely to have PEDs, and any applicable waiting periods can be completed sooner. This proactive approach helps you secure more comprehensive and affordable coverage when you may need it most.

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