Health insurance portability explained

You buy a Health policy from an insurer A. A few months down the line you feel that services of the insurer A are not up to the mark and you want to discontinue the policy and get insured with some insurer B.

What do you do?

As per IRDA guidelines issued in 2011, every insurer has to offer the portability feature in all the policies. Portability simply means that you can change your insurer or your policy without losing the benefits gained on the policy you wish to discontinue with insurer A.

What benefits are retained?

Waiting Period: In the new policy, your waiting period for pre-existing diseases and other treatments with a mandatory waiting period will be shortened to the extent of time you’ve spent in the prior policy. This is good because your clock does not start all over again.

No Claim Bonus: Any no claim bonus you’ve earned for your cover will not be transferred to the new policy. You are however free to increase your cover in the new policy and you will have to pay the premium based on the higher cover amount.

Read more about No claim bonus

Conditions

-One can port a policy only at the time of renewal.
The application for switching the insurer must be submitted at least 45 days prior to renewal.
-The policy was renewed without a break.

Other caveats

Portability is not a guarantee. The insurer you want to shift to may refuse to insure you on grounds of high risk (If you’re old or have developed a serious medical condition) and bad claims history (New insurance company will not be happy to see a lot of claims in your policy).

-Every insurance company has its own variety of health insurance policies. If there is a lot of discrepancy in the old policy and the policy you’ve chosen, the insurer may reject your application. Indeed, it is advisable to go for a policy of comparable benefits.

The new insurer is liable to cover you at least up to the sum insured under the old policy. However, the final cover amount will be subject to what is offered in the new policy. If you’re insured up to 3 lakh in your old policy and the minimum coverage in the new policy is 5 lakh, you can’t do anything about it. You’ve no choice but to get the 5 lakh cover and pay the premium as applicable under the higher sum.

If the waiting period in the new policy is more than the old policy, the benefits will kick in only when the period lapses as per the new policy.

If the sum insured is higher in the new policy, period exclusions will apply for the additional sum. Let’s assume you have served the complete waiting period of 3 years for pre-existing diseases in your old 2 lakh policy. You now switch to a new policy of cover amount 3 lakh and waiting period of 4 years for pre-existing diseases. Until you serve the 4 years waiting period in the new policy, you can’t claim the entire 3 lakh sum. For pre-existing diseases, the new insurer will cover you only up to 2 lakh. Only after 4 years will you be able to claim 3 lakh for pre-existing diseases.

Do let us know about about any queries you have regarding portability. We can also help you port your policy. Just give a call on our toll free no. 18002660101.

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P.S.- Featured image is courtesy of Economic Times.

Your reward for keeping good health: No claim bonus

Medical inflation is estimated between 15-20% every year. With such staggering figures, it is imperative to invest in a good health care policy for maximum returns in future. Well, if you have landed on this page, then congratulations, you are on the right track. You have made a conscious effort to understand your health care policy options and  benefits. One such term which shows up on every policy document, as benefits, is the No Claim Bonus.

What is No Claim Bonus?

When you do not file a claim for a year against your health insurance policy, your insurer provides you an incentive for being healthy. This can be in the form of

– Discount on your yearly premium, or
– Increase in the Sum Insured also known as the Cumulative Bonus.
Read more about Cumulative bonus & No Claim Bonus

Also understand cumulative bonus through this short video

How does NCB benefit you?

A health insurance provider may offer a percentage increase in the sum insured or a discount on the premium payable, if you don’t make a claim for one policy year. One of these two options is available, depending on the company and the plan you choose.

For discount in premium, a person can get between 5% to approximately 20% discount on the premium. Mostly public sector insurance companies like Oriental Insurance, New India Insurance, United India insurance are a few examples.

For an increase in sum insured, you can receive from 5% to a maximum of 100% depending on the policy of your health insurance provider. Almost all private sector companies follow the NCB on sum insured policy.

Read more about Common health insurance terms

Let us understand this via an example to see things in perspective.

If you have a health insurance policy with a sum insured of Rs 5 lakhs, with a 5% increment for a claim free year, then after the 1st year, upon no claim the sum insured will be Rs. 5,25,000.

For a 2 claim free years, your sum insured will now be,

Rs 5,25,000 + (5% of Rs 5,00,000 =25,000) = Rs. 5,50,000.

Note: The percentage increase in the sum insured, is always calculated on the base sum insured and added to the value of the latest sum insured.

With the aforementioned medical inflation every year, the added NCB on your base sum insured and no change in your premium, is definitely a benefit that you need, to take care of increasing health expenditures.

What Happens to the NCB when a claim is processed?

For instance, you have a 3 years and you have enjoyed 3 healthy no claim years. Now, if  insurance provider increases your sum insured by 5% every claim free year, then in your 4th year, for an original sum insured of 5 lakhs, you will be eligible for Rs. 5,75,000.

If you file a claim in your 4th year, then your NCB on your sum insured will decrease proportionately by 5%. So now your sum insured for the 5 th year will be Rs 5,50,000. Hence, the cycle of accumulating NCB starts again.

Please note: The above values are just for the purpose of the example. Every time a claim is processed, there are different consequences, depending on your insurance provider.

Points to Remember

1. Every health insurance policyholder is eligible for the NCB provided the policy is renewed every year without any break.
2. The Sum Insured even after multiple claims, does not go below the original value. However, the premium prices may change.
3. Your NCB can range from 5% to a maximum of 100% for every unclaimed year.
4, Different health insurance providers have different policies with regards to NCB.

For more information on how different insurers provide the NCB, visit Turtlemint and choose the policy according to your requirements.

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Family floater plan or individual policy?

The choice between a family floater plan and individual policy for each family member is not an easy one. There is always a bit of confusion regarding which one will fit your needs best. Here is your job made easy, right from explaining both kinds of plans and putting into perspective the differences and benefits of each.

What’s The Difference?

So, understand it like this. The difference between the two is pretty much like pints and pitcher. In a bar, either you order a pitcher so that everyone in the group gets to drink as much as one wants OR you order pints for everyone. This way they get to drink only their beer.

In the same vein, a family floater plan is an umbrella cover for the family at large. It includes self, spouse and children, but a few insurers can also let you include parents and parents-in-law depending on the policy. Any member listed in the policy is allowed to use the sum assured in any proportion. In short, one plan to cover ‘em all!

Individual policies are meant for one person. They cater to the medical needs of only the individual who is insured. Your spouse and your children can’t benefit from your individual policy. So, the line here is ‘To each his own’.

Premium

A family floater plan is invariably cheaper than the cost of equivalent individual policies for each member, given that in terms of benefits they are of equal standing. There is a simple rationale for this. The chance of all the family members being hospitalized at the same time is fairly low. This way the risk is substantially distributed, which allows the insurance companies to offer it at lower premiums.

Restrictions

There is one age related restriction specific to family floater plans about the children. Family floaters cover children only up to a certain age, usually between 20 and 25 years, after which they are excluded from the family cover. Of course, there is no question of such thing happening in individual insurance policies.

Senior Family Members

The other thing one must note is related to the senior most member of the family. It is not advisable to include senior parents on the family floater plan. One, because it will increase the premium by a good margin, and two, it will not prove adequate for the family on the whole. Senior members have pressing medical needs and are hospitalized more often. This will not leave enough sum to be utilized for others in the family.

Find how to chose a Health Insurance plan for your parents.

No Claim Bonus

Family floater plan is one policy for the entire family. So, if a claim is made for any member, it impacts the no claim bonus. From this point of view, individual policies have an edge over family floater. They are independent of each other and claim on one policy doesn’t affect the NCB of other members’ policies.

Read more about No claim Bonus

Key Take-aways

-Family floater is considerably cheaper than individual policies

-The fact that the sum insured can be shared among the family members in any proportion gives family floater an advantage over individual sum assured.

-The age related restrictions in family floater plans call for a better assessment of your needs. If you’re a nuclear family with senior member in his/her 30s, a family floater plan makes a lot of sense. If you want to include middle-aged/old parents in the family floater, it may not be such a good idea.

Read more about Separate health insurance plans for parents of floater?

Read also An anatomy of an health insurance plan

Read more about Dejargonizing health insurance terms