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Due to medical inflation surge in the past few years, a hospital stay can cause a significant financial impact and burden on a family. Considering the escalating expense of healthcare, insurance providers offer comprehensive healthcare coverage to provide a financial shield in times of distress. In case of a medical emergency, health insurance plans can offer the insured individual and their family financial stability.
However, before granting any insurance policies, all insurance companies are required to complete the KYC in health insurance as stated by the Insurance Regulatory and Development Authority of India (IRDAI). Let's discuss what KYC is in the context of health insurance.
Know-your-Customer(KYC) is the process of identifying and confirming a customer's identification prior to doing business with them. A customer’s name, address, and other basic details are verified during the KYC process. In the insurance industry, KYC is crucial for verifying the identity of the insured, thereby restraining fraudulent actions like identity theft and fake claims. This process is usually done before or during financial transactions with the customer.
With this, health insurance firms can better understand their customers and provide them with personalised coverage based on their requirements, demands, and budget.
According to the Insurance Regulator and Development Authority of India (IRDAI),KYC requirements are now mandatory for the acquisition of all new insurance policies, including those for health, vehicle, and home. Up until 1 January 2023, sharing KYC documents while buying an insurance policy was optional. However, from now on, the insurers will need to get the KYC paperwork from the policyholders who buy their services.
There are many instances where healthcare policies can have inconsistencies, provided that the policyholder and the insurer do not come to an agreement. For example, some policyholders exaggerate their claims or make false claims to get larger payouts from insurance companies. Hence, encouraging responsible insurance practices to prevent deception is quite crucial.
Having KYC information may lower the likelihood of fraudulent claims and help insurance companies analyse and price risks more accurately.
KYC in health insurance requires a few documents, including valid identification proof (Aadhar card/ voter ID card/ PAN card/ passport) and a valid address proof (utility bills/rent agreements/ bank statements). For each new policyholder, the insurance provider is required to perform CDD (Client Due Diligence) based on the provided KYC documents.
Note that this new rule applies not only to the new policyholders but also to all the existing customers. If you are an existing policyholder, you need to produce your KYC documents while renewing any type of insurance (such as general, healthcare, or life) or while purchasing a new policy.
The reasons behind mandating KYC document in health insurance include the following:
>> Also Read: Do Health Insurance Premiums Increase Every Year?
Securing a KYC document in health insurance helps policyholders in numerous ways. It means easier, faster, and hassle-free claim settlements. A few others include:
Having KYC details in the system will help you ensure proper underwriting and eligibility for coverage. This also simplifies the insurance renewal process.
The insurance providers will have centralised database that will help both the insurer and the insured to maintain the policy records. Having a KYC, providers can deliver an upgraded customer experience through better sales and policy renewal services.
As a policyholder, you need to know that insurers can check your claim history across different policies, even if you have purchased the policy earlier from a different insurer.
As for insurance companies, all health insurance providers are required to adhere to the specific KYC standards introduced by the IRDAI. This includes:
The following considerations must be made by policyholders when conducting KYC in health insurance.
The IRDAI has made it mandatory for all policyholders to submit their KYC documentation. If you are planning to buy the best health insurance policy to maintain financial security during times of need, Care Health Insurance can be the ideal choice. Furthermore, it is important to note that current policyholders may not be able to purchase or renew their health insurance if they fail to provide the KYC document in health insurance as soon as possible.
Disclaimer: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.
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