Insurance Claim Rejected? Health and Term Rules, Appeal, Checklist

A rejected insurance claim usually arrives at the worst possible moment: in a hospital corridor, or weeks after a funeral. It is also more common than most buyers expect. In 2024-25 general and health insurers repudiated 29.51 lakh health claims, 7.92% of all they handled, and cut a further ₹18,521 crore from bills they did pay, under policy terms. Life insurers paid 97.82% of individual death claims, but still refused 17,333 of them. Yet the rules IRDAI has written since 2024 are firmly on the policyholder's side, and the appeal costs nothing. This guide explains why claims fail, what the insurer must do, how to fight a refusal, and what to check before you sign the next proposal form.

Written on 22 October 2026. Claim figures are for 2024-25, from IRDAI's Annual Report 2024-25 and its Handbook on Indian Insurance Statistics 2024-25. The rules are quoted from the Insurance Act, 1938 (section 45), the IRDAI (Insurance Products) Regulations, 2024, IRDAI's Master Circular on Health Insurance Business (29 May 2024) and its Master Circular on Protection of Policyholders' Interests (5 September 2024), and the Insurance Ombudsman Rules, 2017, as amended to 9 November 2023. Complaint figures are from the Council for Insurance Ombudsmen's Annual Report 2024-25. The cases are the Ombudsman's own published awards, with no names.

Insurance claims in six numbers

87.50% — health claims paid in 2024-25 · 7.92% — health claims repudiated · 97.82% — individual death claims paid · 1 hour — for the insurer to decide on a cashless request · 3 years — after which a life policy cannot be questioned on any ground · 53,102 — complaints the Insurance Ombudsman received in 2024-25

How many insurance claims are rejected

2024-25	Health claims (general and health insurers)	Individual death claims (life insurers)
Claims handled	372.58 lakh, ₹1,32,488 crore	10,34,455, ₹34,995 crore
Paid	326.01 lakh (87.50%), ₹94,248 crore	10,11,880 (97.82%), ₹33,697 crore
Refused outright	29.51 lakh repudiated (7.92%), ₹11,412 crore	10,494 repudiated (1.01%) and 6,839 rejected (0.66%)
Cut from bills that were paid	₹18,521 crore (13.98% of the amount claimed) disallowed under policy terms	—
Pending at 31 March 2025	17.07 lakh (4.58%)	4,999

Two things in that table deserve a second look. In health insurance, the partial cuts (₹18,521 crore) took more money than the outright refusals (₹11,412 crore): the claim was "approved", but the cheque was smaller than the bill. And in life insurance, repudiated claims are larger than average. They were 1.01% of claims by number but 2.74% by amount, ₹958 crore, because insurers look hardest at large policies that end early.

IRDAI's statistics use two words with a legal difference. A death claim is repudiated when the insurer refuses it under section 45 of the Insurance Act, for fraud or a misstatement in the proposal; it is rejected when it falls outside the policy's terms, such as a lapsed policy or an exclusion. By number, LIC paid 97.59% of its 8,69,086 individual death claims and private insurers together 99.01% of 1,65,369.

Why health insurance claims get rejected

The reasons on a rejection letter are usually one of six, and each has a rule behind it that the policyholder can check.

The insurer says	What the rule says	What to check
"Pre-existing disease"	A pre-existing disease is one diagnosed by a physician, or for which medical advice or treatment was recommended or received, within 36 months before the policy began. Its waiting period can be at most 36 months of continuous cover.	When was the condition first diagnosed? Was it disclosed? Has the waiting period printed in your policy passed?
"Non-disclosure"	After 60 continuous months of health cover (the moratorium period, which counts portability and migration), no policy or claim can be contested for non-disclosure or misrepresentation, only for established fraud.	Count your continuous years of cover, including the policy you ported from.
"Waiting period"	A specific-disease waiting period can be up to 36 months, after which those conditions are covered if the policy was renewed without a break.	The waiting periods listed in your policy schedule, and whether every renewal was paid on time.
"Not medically necessary" or "could be OPD"	The rejection must give the reason with reference to the specific terms and conditions of the policy, and no health claim can be repudiated without the approval of the insurer's Claims Review Committee.	Ask for the clause relied on, and get your doctor to write down why admission was needed.
"Room rent above limit, proportionate deduction"	Whatever the policy says. Proportionate deductions are allowed only where the policy wording provides for them.	The room-rent clause and how "associated medical expenses" are defined.
"Documents not submitted"	After a claim is intimated, the insurer or its TPA must collect the required documents from the hospital; the policyholder is not required to submit them.	Whether the hospital sent the file; IRDAI's rule puts the burden on the insurer.

An example of the 36-month rule. Asha buys a family floater on 1 July. She had been prescribed blood-pressure tablets in March, sixteen months earlier, and ticks "No" against hypertension on the proposal form. Her hypertension is a pre-existing disease under the definition, because it was treated within 36 months before the policy. Had she disclosed it, the insurer could have imposed a waiting period of at most 36 months, after which a heart claim linked to it would be payable. Because she did not, a claim in the second year can be refused for non-disclosure. If she instead stays continuously insured for 60 months, the moratorium bars the insurer from raising non-disclosure at all, except for proven fraud.

Why term insurance claims get rejected

For a life policy, section 45 of the Insurance Act, 1938 is the rule that matters most, and it sets a three-year clock.

After three years, nothing. No life policy can be called in question on any ground whatsoever after three years from the date it was issued, the risk began, it was revived or a rider was added, whichever is later.
Within three years, only fraud or a material misstatement, and the insurer must tell the insured, or the nominee, the grounds and materials in writing.
Mere silence is not fraud, unless there was a duty to speak. And a misstatement counts as material only if it bears directly on the risk: the insurer must show it would not have issued the policy had it known.
Repudiated for a misstatement rather than fraud? The premiums paid until then must be refunded, within 90 days.
Proof of age can be asked for at any time; correcting the terms for a wrong age is not calling the policy in question.

An example. A term policy issued on 15 March 2024 can be questioned for non-disclosure until 14 March 2027. If the policyholder dies in May 2027 and the insurer then finds an old diabetes record that was never disclosed, it cannot refuse the claim on that ground: the three years are over. Had the death come in May 2026, the insurer could refuse it, but only by proving the record existed before the proposal and that it would not have issued the policy had it known.

The other common grounds are outside section 45: a policy that lapsed for unpaid premium, a death falling under an exclusion in the policy (for example, suicide within the period the policy excludes), or a claim for a rider the policyholder never bought.

The rules that protect you

Rule	What it means for you
Cashless in one hour	The insurer must decide a cashless request immediately, and in no more than one hour of receiving it.
Discharge in three hours	Final authorisation must come within three hours of the hospital's discharge request; extra hospital charges for any delay are borne by the insurer, from its shareholders' funds.
Health claims paid in 15 days	A reimbursement claim must be settled within fifteen days of submission.
Death claims in 15 days	Within 15 days of intimation, or 45 days where the claim warrants investigation.
Interest if late	Bank rate plus 2%, from the date of intimation, paid on the insurer's own initiative.
No rejection for paperwork or a late intimation	No claim shall be rejected or closed for want of documents or for delayed intimation, and no claim may be repudiated without legally tenable evidence.
Reasons in writing	A refused or partly paid claim must come with the specific policy terms relied on.
Renewal cannot be refused for past claims	An insurer cannot deny renewal because claims were made in earlier years.
Grace period keeps your credits	Renew within the grace period (15 days for a monthly premium, 30 days otherwise) and waiting periods, pre-existing disease credit and the moratorium are protected.
Porting keeps your credits	Moving to another insurer carries over the sum insured, no-claim bonus, waiting-period and moratorium credits. The old insurer must send your data within 72 hours, and the new one must decide within 5 days.
30 days to change your mind	The free-look period, for life and health policies of a year or more. The refund deducts only a proportionate risk premium, medical-examination cost and stamp duty, and is due within 7 days.

Claim rejected? What to do, step by step

Get the reasons in writing. The letter must name the policy clause. Ask for the Claims Review Committee's approval on a health claim, and for the documents the insurer relied on.
Complain to the insurer first. Every insurer has a grievance officer. It must acknowledge your complaint at once and resolve it within 14 days, giving reasons if it does not accept it. You can also register the complaint on IRDAI's Bima Bharosa portal (bimabharosa.irdai.gov.in). Keep the complaint number.
Go to the Insurance Ombudsman if the insurer rejects your complaint, does not reply within one month, or replies in a way you do not accept. File within one year of the insurer's reply. The Ombudsman for your area hears delayed claims and any partial or total repudiation, from life, general and health insurers. It costs nothing, and you can file online at cioins.co.in, by email, by post or in person.
Expect a decision within about three months. The Ombudsman can first try mediation; if that fails, it passes an award within three months of receiving everything it needs from you. An award can go up to ₹50 lakh, the limit raised from ₹30 lakh in November 2023, plus interest from the date the claim should have been paid.
The award binds the insurer, not you. The insurer must comply within 30 days; if it does not, it owes you ₹5,000 for every day of delay. If you are not satisfied, you remain free to go to a consumer commission or court. But the Ombudsman will not hear a matter that is already pending before, or decided by, a court, consumer forum or arbitrator, so choose the route before you file.

The Ombudsman route works. In 2024-25 the 18 Ombudsman offices received 53,102 complaints: 32,655 about health insurance, 15,431 about life and 5,016 about general insurance. Of the 48,898 they decided, 15,191 were settled by mediation, 9,234 were awards in the complainant's favour and 8,937 in the insurer's; about 81% were decided within three months. Of the 27,575 health complaints the Ombudsman could hear, 26,507, or 96%, were about rejected or cut claims. The most common avoidable mistake: 3,002 complaints were turned away because the person had not complained to the insurer first, and 845 because they came more than a year late.

Real cases: what the Insurance Ombudsman decided

These are awards the Council for Insurance Ombudsmen has published, from 2017, decided on the rules then in force. Today's rules, such as the 60-month moratorium on health non-disclosure disputes, give policyholders more protection than these cases had. The insurers and the people are not named here.

Case	The insurer's reason	The Ombudsman decided	The lesson
Term policy, death after four years (award of 1 December 2017)	Undisclosed diabetes, hypertension and kidney problems	Pay the claim. "A policy cannot be questioned or claim repudiated after completion of 3 years"	Section 45's three years is an absolute bar
Life policy, death within five months (22 December 2017)	A heart attack concealed before the proposal	Pay ₹2.5 lakh with 6% interest: the insurer produced no treatment papers to prove it	The insurer must prove the illness came first
Life policy of ₹5 lakh (5 December 2017)	Kidney disease and diabetes before the proposal	Pay ₹5 lakh: the records showed the disease only after the policy began	Timing is everything; ask for the dates in the insurer's evidence
Life policy without a medical test, death of a heart attack nine months later (Ahmedabad, 23 June 2017)	An old heart attack and heart failure not disclosed	Rejection upheld; the premium had already been refunded	Within three years, a hidden serious illness defeats the claim
Life policy of ₹7.42 lakh (Ahmedabad, 14 July 2017)	Diabetes and heart disease shown by an earlier hospital discharge card	Rejection upheld, but ₹99,000 of premium refunded under section 45	Even a fair repudiation for misstatement returns the premiums
Family health policy of ₹5 lakh (Bhubaneswar, 7 June 2017)	Hypertension was pre-existing	Rejection set aside: the insurer's own 2009 discharge summary said the patient was not a known case of hypertension	Read the insurer's evidence; it may help you
Mediclaim renewed late, angioplasty claim of ₹3.30 lakh (Ahmedabad, 5 June 2017)	The policy was treated as new, so the heart condition was excluded	Pay ₹3,25,847.50: the premium was paid within the 30-day grace period, so cover was continuous	Renew within the grace period and keep the receipt
Hernia surgery bill of ₹46,693, insurer paid ₹17,343 (Ahmedabad, 14 July 2017)	Room above the limit, so every charge cut in proportion	₹27,750 more: the policy allowed other expenses "as per entitled class", not proportionate cuts	A cut is only as good as the policy wording behind it
Admission for fever and sinusitis (Ahmedabad, 14 July 2017)	Not medically necessary; could have been treated as an outpatient	Pay ₹29,900: "It was the doctor who decided the line of the treatment"	A doctor's written advice to admit carries weight
Eye injections in a day procedure (Ahmedabad, 22 June 2017)	Outpatient treatment, under 24 hours	Pay ₹45,203: the eye-surgery clause had no 24-hour condition	Check the clause the insurer quotes, word by word
Health policy of ₹5 lakh, undisclosed arthritis (Bengaluru, 8 May 2017)	Rheumatoid arthritis for at least four years before the first policy	Rejection upheld	A long-standing condition left off the form is the hardest case to win

Before you buy or sign: twelve things to check

Most of the refused claims above were lost, or nearly lost, at the moment the proposal form was signed. These checks take an hour and protect a policy you may pay for over decades.

Fill the proposal form yourself, or read every answer an agent has filled in before you sign. The form is the contract's foundation, and "the agent filled it" is not a defence.
Disclose every illness, test and medicine of the last few years, even ones that seem minor: blood pressure, sugar, thyroid, a past surgery, a hospital stay. For health insurance the window that matters is the 36 months before the policy; a disclosed condition gets a waiting period, an undisclosed one can void the claim.
Disclose habits and occupation truthfully: smoking, alcohol, a risky job. They change the premium, and hiding them changes the claim.
Declare your other policies and your real income. Life insurers ask about existing cover and size the sum assured to income; a mismatch is a common ground for refusing a large claim.
Keep a copy of the signed proposal form and every medical report sent with it. If a dispute comes, the evidence is in that file.
Read the waiting periods and exclusions in the policy schedule: the pre-existing disease wait (at most 36 months), the specific-disease waits, and what is never covered.
Check the room-rent limit, co-payment and sub-limits of a health policy. They decide how much of a bill is paid, as the hernia case shows.
Use the 30-day free-look period to read the policy once it arrives. If it is not what you were told, cancel it for a near-full refund within 7 days.
Pay every renewal before the grace period ends, 30 days for a yearly premium. A break restarts waiting periods and the 60-month moratorium; the angioplasty case turned on it.
Port instead of letting a policy lapse. Your waiting-period and moratorium credits move with you to the new insurer.
Name a nominee, and tell them where the policy and its documents are. A death claim should be intimated quickly, though a late intimation alone cannot be the reason to reject it.
Look at the insurer's claim record in IRDAI's Handbook on Indian Insurance Statistics, which lists death claims paid and repudiated insurer by insurer.

Tax and GST on health and term insurance

No GST on individual policies. On the GST Council's recommendation of 3 September 2025, all individual life policies (term, endowment, ULIP) and individual health policies, including family floater and senior citizen plans, have been exempt from GST since 22 September 2025, instead of 18%. Group policies, including employer-provided cover, still carry GST.
Health insurance premium, old regime only. Section 126 of the Income-tax Act, 2025 (formerly 80D) allows up to ₹25,000 a year for yourself, your spouse and children, and another ₹25,000 for parents; each limit becomes ₹50,000 where the person insured is a senior citizen. A preventive health check-up counts within these limits up to ₹5,000, and may be paid in cash; premiums must be paid by other means.
Term insurance premium, old regime only. Section 123 (formerly 80C), within the ₹1.5 lakh limit shared with PF, PPF and the rest.
Neither deduction exists in the new regime. Section 202 withdraws both, so the GST exemption is now the larger saving for most people on the new regime. The income tax calculator shows both regimes side by side.
The death benefit is tax-free. Money received under a life policy on the insured person's death is exempt under Schedule II of the Act, without the premium conditions that apply to maturity payouts.

Frequently Asked Questions

Why was my health insurance claim rejected? The most common grounds are a pre-existing disease (one diagnosed or treated within 36 months before the policy), non-disclosure on the proposal form, a waiting period not yet over, treatment the insurer says did not need admission, and exclusions in the policy. The rejection letter must name the policy clause relied on, and no health claim can be repudiated without the approval of the insurer's Claims Review Committee.

What should I do if my insurance claim is rejected? Ask for the reasons and the clause in writing, then complain to the insurer's grievance officer, who must reply within 14 days. If the insurer rejects the complaint, does not reply within a month, or replies in a way you do not accept, go to the Insurance Ombudsman within a year. It is free and can award up to ₹50 lakh.

Can a term insurance claim be rejected after three years? No. Under section 45 of the Insurance Act, a life policy cannot be called in question on any ground after three years from its issue, the start of risk, its revival or a rider, whichever is later. Within three years, it can be refused only for fraud or a material misstatement, with the grounds given in writing.

Can a health insurance claim be rejected after five years? Not for non-disclosure or misrepresentation. After 60 continuous months of health cover, counting any policy you ported from, the insurer cannot contest the policy or a claim on those grounds, except for established fraud. Claims can still be refused under the policy's terms and exclusions.

How long does an insurer have to settle a claim? One hour to decide a cashless request and three hours to approve discharge; 15 days to settle a reimbursement health claim; 15 days for a death claim, or 45 days if it needs investigation. A late claim earns interest at bank rate plus 2%.

What is the time limit to complain to the Insurance Ombudsman? One year from the insurer's rejection of your complaint or its unsatisfactory reply, or from one month passing without a reply. You must complain to the insurer first; in 2024-25, 3,002 complaints were turned away for skipping that step.

Is the Insurance Ombudsman's decision binding? On the insurer, yes. It must comply within 30 days or pay ₹5,000 for each day of delay. It is not binding on you; if you are not satisfied, you can go to a consumer commission or court.

Can an insurer reject a claim because I informed it late or a document is missing? No. IRDAI's rule is that no claim shall be rejected or closed for want of documents or for delayed intimation. For a hospital claim, the insurer or its TPA must collect the documents from the hospital itself.

Is there GST on health and term insurance premiums? Not on individual policies, since 22 September 2025: individual life and health insurance, including family floater and senior citizen plans, is exempt. Group policies, including cover provided by an employer, still carry GST.

Can I cancel a new health or term policy? Yes, within the 30-day free-look period from receiving the policy, for any reason. The insurer refunds the premium less a proportionate risk premium, any medical-examination cost and stamp duty, within 7 days.

Rules are as IRDAI, Parliament and the Council for Insurance Ombudsmen publish them, read on 21 and 22 October 2026; statistics are for 2024-25. The cases are summaries of published Ombudsman awards from 2017 and illustrate the principles; each case turns on its own facts and policy wording. This is a guide to the rules, not legal advice on a particular claim. For a large or complex dispute, consider professional help.

Sources

The rules and figures in this article can be checked against these official sources.

Annual Report 2024-25: health and death claims paid, repudiated and pending Insurance Regulatory and Development Authority of India
Handbook on Indian Insurance Statistics 2024-25: individual death claims by insurer Insurance Regulatory and Development Authority of India
The Insurance Act, 1938, as amended to 2025: section 45, no questioning a life policy after three years Insurance Regulatory and Development Authority of India
Master Circular on Protection of Policyholders’ Interests, 2024: claim timelines, free look, grievances Insurance Regulatory and Development Authority of India (5 September 2024)
Master Circular on Health Insurance Business: cashless in one hour, discharge in three, the Claims Review Committee Insurance Regulatory and Development Authority of India (29 May 2024)
IRDAI (Insurance Products) Regulations, 2024: pre-existing disease, waiting periods, the 60-month moratorium Insurance Regulatory and Development Authority of India (notified 20 March 2024)
Insurance Ombudsman Rules, 2017, as amended to 9 November 2023: who may complain, when, and the ₹50 lakh limit Council for Insurance Ombudsmen
Annual Report 2024-25: complaints received, decided and classified Council for Insurance Ombudsmen
Ombudsman awards on death claims (Death - Life27) Council for Insurance Ombudsmen
Ombudsman awards on death claims (Death28) Council for Insurance Ombudsmen
Ombudsman awards on individual mediclaim (Gen27) Council for Insurance Ombudsmen
Bima Bharosa: IRDAI’s portal for insurance complaints Insurance Regulatory and Development Authority of India
Income-tax Act, 2025, section 126: deduction for health insurance premia Income Tax Department
Income-tax Act, 2025, section 123: deduction for life insurance, provident fund and similar payments Income Tax Department
Income-tax Act, 2025, section 202: the new tax regime Income Tax Department
Income-tax Act, 2025: the full text, as amended Income Tax Department
Recommendations of the 56th meeting of the GST Council, September 2025 GST Council
GST simplified: clearing your doubts before the new rates (individual life and health insurance exempt) Press Information Bureau (September 2025)
FAQs-2 on the decisions of the 56th GST Council: individual insurance exempt only where the insured is not a group Press Information Bureau