What Your Insurance Agent May Not Tell You About Switching To A Cheaper Policy

The first thing most families check when switching their parents' health insurance is the premium. There's another number worth looking at before the old policy expires: how long they've been continuously insured. After five years, the insurer can no longer contest a policy or claim over an omission or incorrect answer in the application unless it establishes fraud. Buy a fresh policy without carrying over that history, and the five-year clock starts again.

Aditya B, a Gurugram-based textile startup founder, made that point in a LinkedIn post about changing health plans. 

He drew on his experience switching vendors without giving up benefits earned under an earlier contract. “So the cheaper new policy can cost them the one protection that took 5 years to earn,” he writes.

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His example puts a number on it. Say your father needs a ₹5 lakh heart procedure and his high blood pressure was left off his insurance application. With six years of continuous cover, the insurer would have to establish fraud to contest the claim on that ground. 

If he dropped the old policy and bought a fresh one last year, the insurer could still dispute the claim over a material omission. IRDAI calls those first 60 months the moratorium period. It shortened the period from eight years in 2024.

When a missing answer becomes a fraud dispute

Sujith S S of MoneyDhan raised the fraud exception. “So not declaring BP is technically a fraud in their books,” he says, referring to how an insurer might view the omission.

An insurance adviser who replied to the post drew the distinction with a specific example. If someone takes blood pressure tablets every day and ticks “no” when asked about hypertension, the insurer can argue the answer was deliberate. 

“It must prove that, and the policyholder can answer with an honest mistake or show the insurer already knew,” the adviser wrote. IRDAI's fraud guidelines cover deliberate concealment of a material fact. A missing answer by itself does not establish intent.

How to switch without losing the years

“Porting or migrating the policy carries the credit across. Buying fresh does not,” Aditya writes. Porting moves the cover to another insurer. Migration means moving to another plan with the same insurer. Both can preserve the years already counted towards the moratorium. If the new plan raises the sum insured from ₹5 lakh to ₹10 lakh, the extra ₹5 lakh starts its own five-year clock. Exclusions and room-rent caps still apply under the policy terms.

If the family only wants a bigger cushion for hospital bills, Aditya suggested keeping the base policy and adding a separate super top-up. The base policy retains its history, and the top-up covers eligible costs above its deductible under its own terms. Whichever route the family takes, the adviser's advice was to disclose the medical history accurately and keep a copy of what was submitted.

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