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.

Read more about What is insurance and how does it works?

Read more about  An anatomy of an health insurance plan

Read more about Dejargonizing health insurance terms

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

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