Common Health Insurance Mistakes and How to Correct

Learn about the most common health insurance mistakes people make, their impact, and practical ways to fix them for better coverage and peace of mind.
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3 min
23-May-2025
Health insurance is a crucial financial safety net, but many policyholders make avoidable mistakes that can lead to claim rejections, out-of-pocket expenses, or insufficient coverage. Whether due to a lack of awareness or hasty decision-making, these errors often compromise the value of the policy. Understanding what to watch out for is essential to getting the most from your health plan. This guide highlights some of the most common health insurance mistakes made by Indian policyholders—from misreading the policy coverage to ignoring pre-existing clauses—and provides practical tips to help you stay protected and prepared when you need it most.

Not understanding policy coverage properly

Many policyholders buy health insurance without fully reading the policy document. This can lead to confusion about what is covered, what’s excluded, and how much you’re entitled to claim. Misunderstanding the scope of coverage is one of the most common reasons for claim denial.

Some policies may not cover specific procedures, diseases during waiting periods, or outpatient consultations. It's important to read the policy wording carefully, including the terms, conditions, and exclusions. Always clarify doubts with the insurer or agent before purchase. A clear understanding ensures there are no surprises during emergencies or while filing a claim.

Choosing insurance only based on premium cost

Opting for the cheapest health insurance plan can be a costly mistake. Low premiums often come with limitations such as sub-limits on room rent, disease-specific capping, or a smaller network of hospitals. Focusing only on cost may leave you underinsured.

Instead, consider the plan’s features, sum insured, hospital network, claim process, and customer reviews. Balance affordability with comprehensive coverage that suits your family’s medical needs. It’s better to pay a slightly higher premium for a policy that provides broader coverage and smoother claims than to regret saving a few hundred rupees during a medical emergency.

Ignoring pre-existing condition clauses

Pre-existing diseases refer to any health condition diagnosed before purchasing the insurance policy. Ignoring how your policy treats such conditions can result in claim rejection or long waiting periods. Many buyers don’t realise these clauses until it’s too late.

  1. Waiting periods apply for pre-existing conditions Most insurers have a waiting period of 2–4 years for pre-existing diseases. This means treatment costs related to those conditions won’t be covered during this time, even if you renew the policy regularly.
  2. Non-disclosure leads to claim rejection If you fail to declare a pre-existing condition at the time of purchase and it surfaces during treatment, your claim may be denied. This also risks policy cancellation on grounds of misrepresentation or fraud.
  3. Coverage may vary by insurer Different insurers define and treat pre-existing diseases differently. Some may offer quicker coverage through add-ons or loyalty benefits. Always compare pre-existing disease terms across policies before deciding.
  4. Check for disease-specific sub-limits Even after the waiting period ends, your policy may have caps on treatments for diabetes, hypertension, or asthma. These sub-limits can reduce your claim amount unless you choose a plan with no such restrictions.
  5. Declare everything honestly upfront To avoid future issues, be transparent during the proposal stage. Share details of your full medical history, ongoing medication, and past diagnoses—even if minor. It builds trust and strengthens your claim eligibility later.

Missing policy renewal deadlines

Timely policy renewal is critical to maintaining uninterrupted health coverage. If you miss the renewal date, your policy may lapse, and you could lose accumulated benefits like the waiting period, no-claim bonus, or continuity for pre-existing conditions.

Lapse leads to loss of coverage
If your policy lapses due to non-renewal, you will be uninsured until a new policy is issued. This exposes you to financial risk in emergencies and may require fresh underwriting for reactivation, especially for older policyholders.

No-claim bonus is reset
Missing the renewal deadline can result in the loss of your accumulated no-claim bonus (NCB), which provides increased coverage without extra cost. You may have to start from the base sum insured again in the renewed policy.

Waiting periods restart
A lapsed policy leads to the loss of continuity. This means you’ll have to serve the waiting periods for pre-existing conditions, maternity, or specific treatments again, even if you’ve already completed them in the previous policy term.

Limited grace period for renewal
Most insurers offer a 15–30 day grace period for renewal. If you renew within this time, coverage may resume without new medical checks. Missing this window could result in application rejection or policy reissuance with new terms.

Set reminders or use auto-renewal
To avoid missing deadlines, use digital reminders, calendar alerts, or enable auto-renewal with your bank or insurer’s app. Regular renewals keep your health coverage intact and help you build long-term protection without benefit loss.

Failing to disclose medical history honestly

Non-disclosure or incorrect disclosure of your medical history at the time of purchase is one of the most serious mistakes. It can lead to claim rejection, policy cancellation, or legal consequences. Honesty ensures smoother claim approvals and builds long-term trust with your insurer.

  1. Insurers verify claims against disclosed history When you make a claim, insurers review your declared medical history. If the treatment is linked to an undisclosed condition, your claim may be denied, regardless of how long you’ve had the policy.
  2. Inaccurate disclosure may be treated as fraud Providing false information or concealing illnesses can lead to fraud charges. This allows the insurer to cancel your policy or refuse to settle any future claims, leaving you without protection when you need it most.
  3. Undisclosed medication raises red flags Even failing to mention ongoing medication for common conditions like diabetes, cholesterol, or thyroid issues can be grounds for rejection. Always declare medication and health supplements to avoid complications later.
  4. Transparency helps in customising the plan Sharing your full medical history allows insurers to offer relevant riders, suggest better plans, or help you understand waiting periods accurately. This improves your overall coverage and reduces unpleasant surprises during claims.
  5. Declare minor and past conditions too Do not assume minor issues like past injuries, surgeries, or recurring headaches are irrelevant. Insurers assess long-term patterns. Disclosing them upfront ensures fair underwriting and better claim success rates down the line.

Conclusion

Buying health insurance is a smart financial move, but it only works when you understand and use it correctly. Mistakes like not reading the policy, hiding medical history, or missing renewals can weaken your coverage when it matters most. By avoiding these common errors—such as choosing plans only by price or ignoring pre-existing clauses—you ensure a smoother claims experience and better protection for your health and finances. Be transparent, review your policy regularly, and consult your insurer or advisor for clarity. Smart planning today guarantees support during tomorrow’s emergencies.

Frequently asked questions

What should I check before buying a health insurance plan?
Before buying a health insurance plan, check the sum insured, room rent limits, hospital network, claim settlement ratio, waiting periods, and exclusions. Ensure it covers your health needs, offers cashless facilities, and suits your lifestyle and family requirements.

How can I fix a mistake in my health insurance policy?
You can correct errors by contacting your insurer or visiting their branch during the free-look period (usually 15 days). Submit a written request with supporting documents. Post free-look, changes may require endorsement approval or fresh underwriting.

Is it possible to change or upgrade health insurance after purchase?
Yes, you can upgrade your policy during renewal by increasing the sum insured, adding riders, or switching plans. Some insurers allow mid-term upgrades with underwriting. Porting to another insurer is also possible, while retaining continuity benefits and waiting periods.

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*T&C Apply - Bajaj Finance Limited (‘BFL’) is a registered corporate agent of third party insurance products of Bajaj Allianz Life Insurance Company Limited, HDFC Life Insurance Company Limited, Future Generali Life Insurance Company Limited, Bajaj Allianz General Insurance Company Limited, SBI General Insurance Company Limited, ACKO General Insurance Limited, ICICI Lombard General Insurance Company Limited, HDFC ERGO General Insurance Company Limited, Tata AIG General Insurance Company Limited, The New India Assurance Company Limited, Cholamandalam MS General Insurance Company Limited, Niva Bupa Health Insurance Company Limited , Aditya Birla Health Insurance Company Limited, Manipal Cigna Health Insurance Company Limited and Care Health Insurance Company Limited under the IRDAI composite CA registration number CA0101. Please note that, BFL does not underwrite the risk or act as an insurer. Your purchase of an insurance product is purely on a voluntary basis after your exercise of an independent due diligence on the suitability, viability of any insurance product. Any decision to purchase insurance product is solely at your own risk and responsibility and BFL shall not be liable for any loss or damage that any person may suffer, whether directly or indirectly. Please refer insurer's website for Policy Wordings. For more details on risk factors, terms and conditions and exclusions please read the product sales brochure carefully before concluding a sale. Tax benefits applicable if any, will be as per the prevailing tax laws. Tax laws are subject to change. Tax laws are subject to change. BFL does NOT provide Tax/Investment advisory services. Please consult your advisors before proceeding to purchase an insurance product. Visitors are hereby informed that their information submitted on the website may also be shared with insurers. BFL is also a distributor of other third party products from Assistance Services providers such as CPP Assistance Services Pvt. Ltd., Bajaj Finserv Health Ltd. etc. All product information such as premium, benefits, exclusions, sum insured, value added services, etc. are authentic and solely based on the information received from the respective insurance company or the respective Assistance service provider company.



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