I shall divide your question into two scenarios, generally, those policies are rejected under which the person wishes to be insured has either some pre-existing disease or such disease which is not covered by insurers, there can be other reasons too.

Scenario 1

Pre-Existing disease:

Insurers reject policy approval or top-ups on policy in case there is a pre-existing disease and 48 months has not been elapsed since the person has been declared to be perfectly healthy through a doctor’s certificate. This is as per the regulations of IRDAI and the insurers hold the right to reject any such application. However, there are scenarios where insurers reject insurance application even after the specified time has passed and the person to be insured has been declared healthy. In that case, insurance companies are doing so on their free will and that can be challenged, if required. I’ll explain that part later.

Scenario 2

The disease generally not covered by the insurer:

There are diseases like mental health issues, STDs, and AIDS, etc. which insurance companies tend not to cover and it is likely that they reject applications for such type of insurance. However, as per the guidelines of IRDAI, all the insurers must have plans or policies in place to cover such ailments and shall be treated just like any other physical disease. In that case, if the insurer rejects any such application, it is against the regulations laid down by IRDAI and can easily be challenged.

What should you do?

If your application has been rejected on valid grounds, you cannot do much in that case. However, if your application has been rejected on invalid grounds you can seek relief in two ways:

  1. If your application has been rejected on any pre-existing policy/ existing policy, you can refer your issue to the Insurance Ombudsman, as it deals with all such issues.
  2. If your new application has been rejected, in that case, you have to follow the complaint procedure suggested by IRDAI, it is available on IRDAI’s website