Meera Patil (an illustrative profile), 58, from Kolhapur, thought her husband's hospitalisation was fully insured. The bill was ₹2.4 lakh; the insurer paid about ₹2.05 lakh. She had never heard of "non-payable items", did not know her policy had a 10% co-pay, and spent two anxious days looking for the policy number while the hospital waited.
None of this meant the insurer had cheated her. It meant nobody had explained how a claim actually works. A policy is only as good as the claim it pays, and most claim problems trace back to three things: details not disclosed at purchase, documents that cannot be found, or a family that does not know the policy exists. All three are avoidable.
In this chapter
- How cashless and reimbursement health claims work, and why they rarely pay 100% of the bill
- How life claims are made and the protection the law gives policyholders
- Free-look cancellation, nominations and keeping records in order
- The step-by-step route when a claim or complaint goes wrong
Health claims: cashless or reimbursement
A network hospital is one that has an agreement with your insurer or its TPA (third-party administrator, the company that processes claims for many insurers). At a network hospital you can usually go cashless: the hospital sends a pre-authorisation request and the insurer pays it directly. At any other hospital you pay first and claim reimbursement by submitting bills, reports and the discharge summary.
| Cashless | Reimbursement | |
|---|---|---|
| Where | Network hospital of the insurer | Any hospital |
| How | Hospital requests pre-authorisation; insurer pays the hospital | You pay, then submit bills, reports and discharge summary |
| Your cost | Non-payable items, co-pay and amounts above limits | Full bill upfront, refunded after approval |
| Intimation | Before planned admission; promptly for emergencies | Within the time stated in the policy |
IRDAI's 2024 health insurance master circular asks insurers to decide on cashless requests within one hour and to give final discharge authorisation within three hours of the hospital's request. Keep the policy number, insurer helpline and TPA details saved on your phone and with one family member.
Worked example: why the claim paid less than the bill
Assumptions, illustrative: a reimbursement claim with a total bill of ₹2.4 lakh, of which ₹12,000 is non-payable items (such as gloves, toiletries, registration and attendant charges). The policy has a 10% co-pay and no room rent issue.
- Admissible amount: ₹2,40,000 − ₹12,000 = ₹2,28,000.
- Co-pay: 10% of ₹2,28,000 = ₹22,800, borne by the family.
- Insurer pays: ₹2,28,000 − ₹22,800 = ₹2,05,200.
- Family pays: ₹2,40,000 − ₹2,05,200 = ₹34,800, about 14.5% of the bill.
Knowing this in advance lets you keep a small amount aside in the emergency fund for such costs, or choose a policy without co-pay if you can afford the higher premium.
Life claims: what the nominee does
For a death claim, the nominee submits the claim form, death certificate, policy document, identity and bank proof, and any medical or police records the insurer asks for. Under IRDAI's 2024 master circular, insurers must settle death claims that need no investigation within 15 days of receiving the claim, and within 45 days where an investigation is needed.
Under the Insurance Act, once a life policy has been in force for three years, it cannot be called into question on any ground, including misstatement. That is a strong protection, but it depends on premiums being paid without a lapse and does not excuse fraud. In the first three years, honest disclosure is everything.
Disclosure, free-look and nominations
When buying any policy, declare existing illnesses, medicines, smoking and alcohol use, hazardous hobbies and other policies you hold. It may raise the premium or add a waiting period, but it removes the most common ground for rejection. Never sign a proposal form someone else filled without reading every answer.
After you receive a new policy, the free-look period lets you review the terms and cancel if they do not match what you were told. IRDAI's 2024 rules set this at 30 days for new life policies, and health policies also carry a free-look window. On cancellation, the premium is refunded after small deductions for the days on cover and costs such as medical tests.
| Keep on one page | Why it matters |
|---|---|
| Insurer, policy number and type | The family can start a claim in minutes |
| Sum insured or sum assured | Shows gaps at a glance |
| Renewal or premium due date | A lapse can restart waiting periods |
| Nominee name and relationship | Updated after marriage, birth or death |
| Helpline, agent or TPA contact | Needed at admission or on death |
When a claim goes wrong
- Ask the insurer for the reason in writing, then write to its grievance officer and keep the reference number.
- If unresolved, register the complaint on IRDAI's Bima Bharosa portal.
- If the insurer rejects the complaint, or does not reply within 30 days, approach the Insurance Ombudsman for your area, generally within one year of the insurer's reply. The service is free and you do not need a lawyer.
Common mistakes to avoid
- Not intimating the insurer in time: late intimation can delay or complicate a claim.
- Losing original bills and reports: reimbursement depends on complete documents.
- Leaving an old nominee in place: money can reach the wrong person or get stuck.
- Letting a renewal lapse during a busy month: health waiting periods and the moratorium clock restart.
- Accepting a rejection without asking why: many disputes are resolved once the clause is examined.
Try this yourself: In the next 10 minutes, make the one-page policy list described above, check each nominee, and save every insurer's claim helpline in your phone and your spouse's. If your policies are scattered across insurers and agents, our guide to consolidating investments and policies shows how to bring them together.
Frequently asked questions
Why did my health insurance not pay the full hospital bill?
Usually because of non-payable items, a co-pay, a room rent cap or a sub-limit on that treatment. The settlement letter should list each deduction. If a deduction is not supported by the policy wording, you can raise a grievance.
How long does a death claim take to settle?
Under IRDAI's 2024 rules, insurers must settle death claims within 15 days if no investigation is needed, and within 45 days if one is. Complete documents and a known nominee make the process faster.
Can I cancel a policy I was mis-sold?
Within the free-look period you can cancel for any reason and get a refund, minus small deductions. After that, complain to the insurer and, if needed, to Bima Bharosa and the Insurance Ombudsman, explaining what you were told at the time of sale.
Is the nominee the final owner of the insurance money?
Not always. In many cases the nominee receives the money as a trustee for the legal heirs, though the law gives some nominees, such as close family under certain conditions, a stronger right. A clear Will avoids disputes; see our estate planning guide.
You have completed the module: You now know why protection comes before investing, how to size term cover, how to structure health cover and read its fine print, which other covers close real gaps, and how to keep claims smooth. If you would like the Money n Wealth team to look at your family's cover, book a free review.
Ready to check your own cover? Book a free review, or continue with Tax for Investors.