Why Hiding Health Details in Insurance Can Backfire: The Importance of Full Disclosure
Ankit Agrawal
Results-driven financial expert with 7+ years of experience, leading Right Financiers, a renowned insurance and investment firm since 2001. Partnering with India’s top financial providers, we deliver tailored investment, insurance and risk management solutions, empowering clients to achieve long-term objectives with maximum returns and security.
Health insurance offers vital financial security during medical emergencies. Yet, a surprisingly large number of individuals fail to disclose critical health information—whether intentionally or due to oversight—when applying for or transferring health insurance policies. This common oversight can lead to claim rejection at crucial times, leaving policyholders stranded during hospitalizations or major treatments.
This article explores why it is essential to provide complete and accurate health details when purchasing or porting a health insurance policy, and how honesty can protect you from costly consequences.
The Urge to Conceal: Why People Don’t Disclose
Many individuals withhold medical details during the insurance process to:
- Avoid higher premium charges (known as loading);
- Bypass long waiting periods for pre-existing conditions;
- Reduce the risk of their application being declined.
While this approach may seem beneficial in the short run, it can create significant problems later, especially when you make a claim and the insurer decides to investigate.
Insurance Is Based on Trust, and the Law Demands It
Health insurance contracts are governed by a principle called “utmost good faith”, where the insured must voluntarily disclose all relevant medical information. The IRDAI (Insurance Regulatory and Development Authority of India) requires buyers to disclose all facts that may influence the insurer’s risk assessment.
Under Section 45 of the Insurance Act, if false or incomplete information is found, especially within the initial three years of the policy, the insurer may legally deny claims or cancel the policy altogether.
What Happens When Facts Are Hidden?
Concealing even minor health issues can lead to devastating consequences. Consider these situations:
- A person fails to mention their diabetic status. Years later, they suffer a heart attack, often related to diabetes. Upon verification, the insurer finds the omission and refuses to pay.
- Someone hides their history of cancer. If the disease recurs during the policy’s waiting period, the insurer may reject the claim due to previous non-disclosure.
Such situations often result in financial strain and emotional distress, particularly during medical emergencies when support is critical.
Porting a Policy? Honesty Still Matters
When switching from one insurer to another (called portability), some individuals believe they can omit health conditions or provide a “clean slate.” This is a misconception.
Insurance companies often review historical policy documents, medical records, and continuity details during porting. If discrepancies are found between previous and current disclosures, it may raise red flags. The result: delays in claim processing or outright rejection.
Insurers Have Advanced Ways to Detect Fraud
Modern insurers employ various methods to verify the health information provided:
- In-depth review by medical underwriting teams.
- Cross-verification with centralized digital health records.
- Access to hospital and prescription history.
- Investigations during high-value claims or unusual cases.
Field officers may contact doctors, request diagnostic reports, or review your previous health coverage. With such scrutiny, any misinformation is likely to be discovered, particularly when you file a major claim.
The Mutual Trust Factor
Insurance is a two-way trust agreement. The insurer agrees to bear your future health risks, and in return, you are expected to disclose all important facts. Breaching this trust not only leads to personal loss but also weakens the entire insurance ecosystem.
Widespread non-disclosure contributes to increased fraudulent claims, prompting insurers to raise premiums for all policyholders, including those who have made full disclosures.
The Safer Approach: Be Transparent from the Start
Rather than taking risks with partial disclosures, it’s always better to share full medical details and allow the insurance company to assess and accept the risk appropriately. Here’s why:
- In many cases, insurers do not reject applications; they may simply impose a waiting period, charge a slightly higher premium, or ask for additional tests.
- Once a condition is declared and approved, claims related to it are valid and protected.
- Courts are more likely to support policyholders who have made good-faith disclosures.
- Most importantly, you get peace of mind, knowing your policy won’t be questioned when you need it most.
How to Ensure Claim Approval: Key Practices
- Double-check your application – Make sure all health details are correctly filled in. Avoid relying solely on agents or automated forms.
- Declare lifestyle habits – If requested, disclose habits such as smoking, alcohol use, or a sedentary lifestyle.
- Provide a complete medical history – Include surgeries, treatments, chronic conditions, or allergies.
- Share family medical history if required – Some insurers factor in hereditary risks.
- Do not omit minor ailments – conditions that seem trivial today may become relevant in the future.
Final Thoughts: Honesty Is Your Best Policy
Your health insurance is your safety net — but it only works if it’s built on truth. Withholding material health information might save time or money during the application process, but it invites complications when you are most vulnerable.
With rising treatment costs and unpredictable health risks, the last thing you need during a health crisis is a claim rejection. Disclose all relevant information truthfully, keep your documentation organized, and ensure your insurance policy fulfills its promise when it matters most.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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