Waiting period
The interval, typically 2 to 4 years, during which a new health insurance policy does not cover certain named or pre-existing diseases.
In plain language
Buying health insurance does not mean every condition is covered from day one. Insurers build in a delay before certain diseases are covered at all.
That delay is the waiting period. The workbook's guidance is blunt about the consequence: buy cover before retirement, and the waiting period will already be behind you by the time you actually need the policy most.
How it works
The workbook puts the waiting period for many diseases at 2 to 4 years from when a health policy is first taken. Buying cover only close to or at retirement means the waiting period may still be running exactly when health costs typically rise.
Age at purchase also drives cost sharply upward: the workbook's figures show a premium for Rs 5 lakh of cover at around Rs 10,000 at age 45, more than doubling to about Rs 22,000 if the same cover is bought at age 60. Once a policy is in force, regulation requires insurers to offer mandatory lifetime renewal, and premiums, though they can rise over time, cannot by regulation be linked to claims actually made.
A worked example
Mr Sinha buys a Rs 5,00,000 health cover at age 45 for a premium of about Rs 10,000 a year. His policy's waiting period of 2 to 4 years for certain named diseases has already run out well before he retires at 60.
His colleague, Mr Dutta, waits until he actually retires at 60 to buy the same Rs 5,00,000 cover. His premium is roughly Rs 22,000 a year — more than double Mr Sinha's — and any diseases subject to the 2-to-4-year waiting period are not yet covered for that same window, right at the point in life when he is most likely to need them.
Why NISM asks about it
Chapter 8, section 8.1.3 (Planning for Medical Costs), gives the 2-to-4-year waiting period figure alongside the age-45-versus-age-60 premium comparison, as the core argument for buying health cover well before retirement. Expect a question on why early purchase matters (waiting period expiry, lower premium) rather than just the premium figures alone.
Common exam traps
- The waiting period is a fixed span from policy purchase (2 to 4 years), not from retirement — buying early lets the waiting period lapse before it is actually needed.
- Premiums cannot be raised specifically because claims were made — cost increases over time are allowed, but not as a claims-based penalty.
- Mandatory lifetime renewal is a regulatory requirement, not a feature specific to any one insurer.
- The Rs 10,000-versus-Rs 22,000 premium comparison is for identical Rs 5 lakh cover — the difference is driven by age at purchase alone.
Check yourself
1.A 45-year-old with employer medical cover plans to buy his own health policy at 60 on retirement. What are the two arguments against waiting?
- a)Only that the premium will be higher — Rs 22,000 instead of Rs 10,000 for Rs 5 lakh cover
- b)The premium more than doubles from about Rs 10,000 at 45 to Rs 22,000 at 60, AND waiting periods of 2 to 4 years mean cover bought at retirement is not available when retirement begins
- c)That employer cover continues after retirement anyway, so the question is academic
- d)That health insurance cannot be bought after age 55 at all
Show the answer
Answer: (b) The premium more than doubles from about Rs 10,000 at 45 to Rs 22,000 at 60, AND waiting periods of 2 to 4 years mean cover bought at retirement is not available when retirement begins
On price: ⚠️ "the premium for a Rs 5 LAKH COVER AT AGE 45 WILL BE AROUND Rs 10,000. THIS MORE THAN DOUBLES TO Rs 22,000 IF THE COVER IS TAKEN AT AGE 60." And ⚠️ "THERE WILL BE ADDITIONAL COSTS FOR ANY HEALTH ISSUES THAT MAY DEVELOP IN THIS INTERVENING PERIOD" — or worse, those conditions fall under the exclusions and are never covered.
On timing — the stronger argument: ⚠️ "MANY DISEASES ARE COVERED AFTER A WAITING PERIOD OF 2 TO 4 YEARS. SO TAKING COVER BEFORE RETIREMENT STARTS WILL HELP BECAUSE THE COVER WILL BE AVAILABLE BY THE TIME THE PERSON RETIRES."
A higher premium costs money. An unserved waiting period means no cover at all in the first years of retirement, precisely when employer cover has ended.
⚠️ Option (c) is the assumption to correct: "MOST PEOPLE ARE COVERED BY EMPLOYER MEDICAL BENEFITS WHILE EMPLOYED. BUT THESE CEASE ON RETIREMENT UNLESS THE INDIVIDUAL WORKS WITH THE GOVERNMENT AND RELATED AGENCIES."
Two protections that follow once the policy exists: ⚠️ regulations require MANDATORY LIFETIME RENEWAL, and premium increases CANNOT BE LINKED TO CLAIMS BEING MADE. And the standing instruction: ⚠️ INCREASE THE SUM ASSURED EVERY TIME THE POLICY IS RENEWED.
2.Kavita, an All Citizen model subscriber registered through PoP 'A', wants to activate a Tier II account. Which statement is CORRECT?
- a)She may activate Tier II through any PoP of her choice, and must complete fresh KYC for it
- b)She must pay an account-opening charge for Tier II, and her Tier I nominations will automatically apply to it
- c)She must activate Tier II through PoP 'A'; no separate KYC is needed as she already holds a PRAN card, there is no opening charge, and she must make fresh nominations because Tier I nominations do not apply to Tier II
- d)She cannot open Tier II until her Tier I account has completed three years
Show the answer
Answer: (c) She must activate Tier II through PoP 'A'; no separate KYC is needed as she already holds a PRAN card, there is no opening charge, and she must make fresh nominations because Tier I nominations do not apply to Tier II
Four Tier II rules apply to Kavita:
- Which PoP: for NPS subscribers under the All Citizens Model, the PoP through which the Tier II account is activated should be the same as the one through which the Tier I account was registered.
- KYC: no separate KYC formalities need to be complied with for the Tier II account for subscribers who have already complied with the same at the time of opening the Tier I account and have been issued a PRAN card.
- Cost: there are no charges for opening a Tier II account.
- Nominations: the nominations made in the Tier I account of the subscriber will not be applicable to the Tier II account.
So option C is correct.
Why the others are wrong:
- Option A describes the Government-model rule. Subscribers who have registered on the NPS under the government model may activate the Tier II account through any PoP. It also wrongly requires fresh KYC.
- Option B gets both the charge and the nominations wrong.
- Option D invents a waiting period. Tier II may be opened along with the Tier I account or subsequently at any time provided the subscriber has an active Tier I account. The three-year period belongs to partial withdrawal from Tier I.
Where this is taught
Free preparation for NISM Series XVIIRelated terms
- Second careerPaid work a retiree takes up in the early retirement years, not necessarily connected to their old job, used to delay drawing on the retirement corpus or to help close a shortfall in it.
- Health insuranceInsurance that covers an insured person's medical and surgical expenses, regulated in India by the Insurance Regulatory and Development Authority of India (IRDAI).
- Lifelong renewabilityThe regulatory requirement that a health insurer must keep renewing a policy for the insured's lifetime once it has been issued, with premiums allowed to rise but not because claims were made.
- Medical corpusA pool set aside for the health costs insurance does not pay — medicines, consultations, tests and long-term care — which the workbook says must hold at least three years of such expenses in liquid assets at retirement.
- NPS SwasthyaA PFRDA initiative that pairs old-age income security with healthcare coverage in a single product, introduced because out-of-pocket medical spending is a major drain on retirement savings.