Portability between Health Insurers: All You Need to Know
Often, we take up a health insurance policy only to realise that we are not happy with the plan, or that another insurance company is offering a better plan. Though insurers provide policyholders a 15-day ‘free-look period’ within which time they can return the policy, sometimes we feel the need to switch insurers well into the policy.
Acknowledging this need, the Insurance Regulatory and Development Authority (IRDA) issued a circular in 2011, stating that a policyholder can transfer their existing health insurance policies to a new insurer. This includes individual health insurance policies and family floater policies issued by a non-life insurance provider.
You can even switch from group health insurance to an individual plan, if need be. The insured would not have to compromise on the discounts or bonuses provided, and can enjoy the same benefits provided by the previous plan. What’s more, the new policy can also be further customised to add more benefits.
Though portability is offered in health insurance, such is not the case with life insurance, as they are long-term contracts. However, it is possible to switch insurers in a few cases. When it comes to traditional plans, there is a surrender charge if you want to stop a plan mid-term. It can, thus, be quite expensive.
With unit-linked insurance plans (ULIPs), the funds can be withdrawn in 5 years at no charges, and you can re-apply for a ULIP plan with another insurer, thereafter. In the case of term plans, if you want to change the insurance policy, you can simply stop paying the premiums as there is no surrender charge.
Let us consider the aspects governing health insurance portability, in particular, and the factors to be borne in mind when porting a health insurance plan.
When You Should Consider Porting Your Health Insurance Plan?
Though the notion of having to port your health insurance plan seems daunting, porting your insurance plan might be important, if not necessary, under the following circumstances:
- Hidden Clauses in Your Current Plan - During the course of the policy, while making a claim or during an emergency, you might come across some hidden clauses that were not made clear to you when signing the policy, but that are binding. You could consider switching your insurance policy for a more comprehensive or transparent insurance provider, if this should happen.
- Claim Settlement - If your current service provider has a history of slow claim settlements, or a bad claim settlement ratio, you could opt for a more reliable insurance provider in such a case.
- Bad Service - If your insurer does not live up to what was formerly promised to you, or the expected quality of services, you could consider switching your insurer.
- Need for Specialised Services - If you have taken up a health insurance policy from a general insurance service provider, they might not provide you some specific services you are looking for. In such a case, you could opt for a more specialised insurance provider instead.
- Better Products and Offerings - Insurance companies are constantly coming up with new products and services. You can consider changing your existing policy for a better one, if this should happen.
- Price Differences - Given the stiff competition in insurance industry nowadays, you could end up getting more benefits for a lesser premium, with another insurance provider. It is a good idea to make the switch in such cases.
- Additional Cover Needed - A situation might arise, where you are looking for a specific cover for a certain illness, for example a critical illness cover. It might be better that you change your insurance plan, if you face such a scenario.
Now that you know when you should port your health insurance plan, it makes sense to get acquainted to the portability guidelines.
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Health Insurance Portability Guidelines
Before porting your insurance policy, there are certain aspects you need to bear in mind, as health insurance is a long-term decision. You should ensure that you choose the right policy, so that your situation doesn’t go from bad to worse.
- Portability Time frame - Health insurance portability is only permitted during the renewal stage of the policy and not at other times.
- Types of Policies - Both, individual and family policies can be ported.
- Types of Insurance companies - Policyholders can port their policies from any general/specialised insurance companies to any general/specialised insurance companies.
- 45-day Notice Period - The application for portability should be made to the new insurer 45 days prior to your existing policy expiring. You should also state the name of the insurance provider whose policy you currently hold.
- Acceptance Period of New Insurer - The new insurer is required to respond to your portability request within 15 days of the receipt of your proposal. If there is a delay on the part of the insurer, and your policy renewal date is nearing, then the onus lies with the new insurer. It is their duty to request the old insurer to provide you with short-term insurance (up to 30 days from the due date). The premium which you would have to pay for this short-term insurance would be calculated on a pro-rata basis.
- Underwriting Norms - The new insurer is required to work within their underwriting norms, when they consider applications for porting of policies. If your current policy is claim-free and you do not have any pre-existing illnesses, the company might charge the nominal premium only. However, if such is not the case, the premium amount might increase or the insurer might refuse to provide you with a policy altogether.
- Declining Application for Porting - Portability is not guaranteed, as the new insurer has the right to decline the proposal for portability, if the risk is not acceptable to them, as per their underwriting policy. If this should happen, you can go back to your old insurer, even if your application for porting your policy is mid-way.
- Waiting Period - When you decide to port your policy, you needn’t have to wait out the entire waiting period, once again. Most insurers have a waiting period clause for pre-existing illnesses. Thus, if you have a waiting period of 2 years on your existing policy, and you have already completed one year, you would have to complete a waiting period for that one pending year in your new policy. Additionally, if you have already completed your 2-year waiting period with your current insurer, you would receive cover on an immediate basis from your new insurer.
- Continuity of Policy - The policy will be denied by the new insurer, if there was a break in the policy. Thus, you are required to port your existing policy, before it expires. You should ensure that you have the necessary documentation that highlights the continuity of your policy coverage.
- Like-to-like Policies - Policyholders need to bear in mind the fact that only similar or like-to-like policies are portable. What this means is that you can migrate from one top-up plan to another or one basic reimbursement plan to another.
Steps to be Followed When Porting Your Health Insurance Plan
The following are the steps you need to follow during the portability process:
- Step 1 - Apply for portability to the new insurer within 45 days of your current policy expiring.
- Step 2 - Fill up the forms for porting policies, and keep all your documents of your existing policy ready.
- Step 3 - The new insurer will check your details and if everything is in place, the plan will be ported within a 7-day timeframe.
- Step 4 - The insurer will feed in all the required information needed while porting health insurance policies, to the IRDA portal.
- Step 5 - The new insurer will frame the proposal according to their underwriting norms, once they receive the required information.
- Step 6 - The new insurer will process your application and provide you with their proposal in 15 days. If this is not done within a 15-day period, despite them having received the required information, they will be bound to accept your request for porting your policy.
Advantages of Porting Health Insurance Plans
There are numerous advantages to porting health insurance plans. They are:
- New Sum Insured - When it comes to portability, the sum insured and accrued bonus will be added, to determine the new sum insured. Furthermore, the existing no claim bonus will also be added to the new sum insured.
- Continued Previous Benefits - All the benefits provided by the old policy will remain in force in the new policy.
- Lower Policy Premiums - Due to the myriad of policies offered by many insurance players, if you are porting your policy, your new insurance provider would probably offer you existing benefits enjoyed in your old policy for even lower premiums. This will bring down the cost of insurance, and help save more money.
- Transparency - As the policyholder has the option of moving to a new service provider, they would have the option of porting their policy to an insurer that follows transparent practices, with no hidden conditions and clauses.
- Customised Policy - Policyholders have the privilege of modifying their existing policy to suit their health requirements, such as opting for additional cover as per their current lifestyles and health stats, or changing their nominees.
- Time-bound Exclusions Absent - Policyholders needn’t worry about time-bound exclusions, when porting their policy.
- Better Claim Settlements - If policyholders find the claim settlement process very slow and cumbersome with their previous insurer, they might enjoy better services with their new insurer, depending on the insurer’s claim settlement ratio.
- Better Overall Services - With a little research, policyholders have the advantage of picking a better insurer, known for their high quality services. This is an important advantage porting provides.
Read More: Advantage Of Health Insurance Portability
Disadvantages of Porting Health Insurance Plans
Though the advantages far outweigh the disadvantages, there are certain limitations when it comes to porting health insurance plans. They are:
- Timing - Portability is only allowed around the time of renewal, and not at other times.
- Higher Premiums - If the additional benefits provided by the new insurance company come with higher premiums, then that might negate any expected monetary benefit from wanting to port the policy.
- Significant Policy Changes are not Possible - Porting can only take place within policies of a similar type, and limited to products that cover a similar risk. Policyholders cannot port to policies that are completely different.
- Loss of Benefits in Some Cases - If a policyholder moves from a group insurance policy to an individual policy, they might not get all the benefits that were included in their previous policy.
Additional Factors to Bear in Mind
There are some additional aspects a policyholder needs to bear in mind, if they plan to port their insurance policy. They are:
- Mid-way while porting, the policyholder can go back to the old insurer if they wish.
- If a policyholder should go back to their previous insurer, would be taken back by the insurer without any additional conditions, or an increase in premiums.
- There are no porting charges. Customers are only required to pay the premiums of the new policy chosen.
- There is a 30-day grace period for renewing one’s policy while the porting is underway.
- The new insurer is required to provide a minimum insurance equivalent to the sum insured of the old policy. However, policyholders can opt to increase the minimum sum insured during the renewal stage.
- Policyholders can choose to shift from one plan to another within the same insurance company.
- In the case of a group insurance cover provided by your company, you can opt to port the health insurance cover provided by your employer, to an individual cover. However, you can convert this group insurance plan to an individual plan only with the same insurer. After a year under the individual cover, you can switch to a different insurer.
- If your family members are covered under a group insurance policy provided by your employer, they can migrate from such a group policy to either a family floater health insurance policy or an individual health insurance policy, with the same insurer.
Over to You!
Now, you know everything you needed to know about porting your health insurance policy. But before you jump into action and get your health insurance ported, remember not to port it just to lower down your premiums as you may end up losing all your benefits and features that you currently enjoy.
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Written By: PolicyBazaar - Updated: 15 May 2020