Missed declaring parents’ pre-existing conditions? Know if you should disclose them now or switch policies

What happens if you don’t tell your insurance company about your parents’ diabetes, hypertension or other existing medical conditions while buying health insurance? The problem usually shows up when your family tries to file a claim and the insurer reviews medical records.

But does every missed disclosure allow the insurer to reject your claim or cancel your policy? Or does it depend on whether the undisclosed condition was important to the insurance contract?

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Can an insurer reject your parents' claim because a pre-existing condition was not disclosed?

A parent may have been taking medication for years, but that detail can be missing from the insurance application. When hospital records reveal the gap, the insurer will examine whether it would have influenced the decision to offer cover.

“A material omission can lead to claim rejection and, where the rules and policy terms permit, cancellation. Describing it as an oversight does not automatically settle the matter, although an omission alone does not establish fraud,” says Abhishek Bansal, CEO, Insurance Business, InsuranceDekho.

“It should not, however, be assumed that every non-disclosure automatically gives the insurer a right to reject every claim or cancel the policy,” says Surinder Bhagat, President, Employee Benefits, Prudent Insurance Brokers.

This means the consequences can depend on what was not disclosed and whether it was material to the insurer's underwriting decision, the policy terms and the circumstances in which the omission came to light.

Complete and accurate disclosure of medical history at the proposal stage can help avoid disputes during claim decisions.

If you are unsure whether a parent’s medical history is relevant, do not rely on memory or assume that a condition is too old or minor to mention. Disclose the diagnosis, when it was diagnosed, whether treatment is ongoing and any regular medication, where applicable.

“Hence, it is always recommended that every policyholder should share the complete medical history for the best experience with your insurance policy,” says Arti Mulik, Chief Technical Officer, Universal Sompo General Insurance.

If the policy is already active, should you disclose the condition now?

If the policyholder later realises that a parent's medical condition was missed from the proposal form after the policy has already been issued, it is better to put the correct information on record immediately rather than wait until a claim arises.

The policyholder should write to the insurer, mention the policy number, explain what was missed, and share the relevant diagnosis, prescriptions, test reports or discharge papers.

Ask for acknowledgement, a written decision on how the disclosure affects cover and, where applicable, an endorsement updating the policy, explains Bansal.

The insurer may reassess the risk in accordance with its underwriting guidelines. The important point is to create a clear documentary trail before a claim occurs.

What if the insurer changes the policy terms after the disclosure?

A policyholder should not discontinue an existing health insurance policy simply because the insurer asks for additional information or changes the terms after reviewing the medical history.

The first step should be to understand exactly what the insurer is proposing and whether the policy can still serve the family’s needs.

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If a switch becomes necessary, portability is worth exploring because eligible credits for waiting periods and continuity can move with the policy. Even then, the new insurer will assess the medical history afresh and may apply its own underwriting terms, explains Bansal.

Buying afresh without portability can restart applicable waiting periods.

With portability, fresh waiting periods may apply to additional cover or to medical conditions declared for the first time. Such newly declared conditions will undergo fresh underwriting, and coverage will depend on the new insurer’s decision when the policy is issued, he adds.

This is why the existing policy should generally be kept active until the replacement policy has been formally accepted, issued and become effective.

“As a practical rule, do not cancel the existing cover until alternative coverage has been formally accepted and the continuity implications are understood,” says Bhagat.

Parent's condition missed on the proposal form? What should you do?

The first step is to disclose it immediately and document the disclosure, rather than waiting for hospitalisation or a claim.

Along with the disclosure, policyholders should also preserve the original proposal form, policy schedule, and any acknowledgement received from the insurer.If an agent assisted with the proposal, those emails or messages should also be retained, says Bansal.

According to Bhagat, the policyholder should maintain a consolidated medical file containing:

• Previous and current diagnostic reports
• Doctor consultations and prescriptions
• Hospitalisation and discharge summaries
• Relevant investigation reports
• Details of ongoing medication
• Previous claim records
• The original proposal form and policy documents
• All correspondence with the insurer regarding the disclosure

Most importantly, keep written acknowledgement from the insurer and any subsequent endorsement, underwriting decision or communication regarding the condition.

The safest approach is not to wait for a claim to test whether an omission matters. If a policyholder discovers that a parent's medical condition was inadvertently missed, they should disclose it formally, retain the insurer's acknowledgement and understand any revised terms.

At the same time, they should avoid letting an existing policy lapse until they fully understand the implications of any alternative cover.