The Insurance Regulatory and Development Authority of India (IRDA) has devised a convenient method that comes as a welcome relief to those unhappy with their current health insurance providers - Health Insurance Portability.
Health Insurance Portability allows policyholders to transfer their existing health insurance policies to a new health insurance provider. Portability safeguards customers from being taken for granted by insurance companies, gives them flexibility, and offers better and more options.
The best part about Health Insurance Portability is that customers have the freedom to switch to a better health insurance provider, without having to worry about losing accrued benefits from the previous policy. The policyholder may also carry forward the waiting period for coverage of pre-existing diseases.
Let’s take a look at some of the most common reasons why customers choose to port out of their existing health insurance providers.
Common Reasons behind Health Insurance Portability:
- Poor service quality
- Inadequate cover for specific health issues
- Slow and cumbersome claim settlement
- Late reimbursements
- Hiked premium, in case a claim is made
- Hidden clauses and conditions - Lack of transparency
- Co-payment clauses
- Room rent limits
- Better deals and more economic offerings from another health insurance provider
- Desire to move to a specialised health insurance company offering personalised services in sync with one’s needs
Now that you know the common reasons that force most people to port out their health insurance from their existing health insurance providers, let’s look at the pros and cons of health insurance portability.
Pros and Cons of Health Insurance Portability
Portability allows customisation as policyholders can change/modify the current policy as per their current health condition/requirements and lifestyle changes. For instance, one can opt for additional cover, add fresh nominees, etc.
Portability can be opted for only when the insurance policy is due for renewal, not at other times.
The existing sum insured is clubbed with any bonus accrued to compute the new sum insured. The No Claim Bonus (NCB) is also added to the new sum insured.
Policyholders can only port to similar kind of policies and not to different ones.
Sometimes, additional benefits are offered at higher premiums.
Policyholders who decide to move from group insurance policies to individual policies may lose some of the benefits included in the previous policy.
Now, it’s time to get acquainted with the rules of health insurance portability. To read more about benefit of health insurance portability, Click Here.
Health Insurance Portability Rules
Permitted Policy Types
Only similar health policies can be ported – a policyholder can port out from a reimbursement plan to another reimbursement plan or from one top-up to another top-up plan.
However, family as well as individual policies can be ported.
Policyholders can port policies from any general or specialised insurance company to another specialised or general insurance company.
Health insurance portability is allowed during the current policy renewal time only, not any in-between period. Also, it is imperative for policyholders to renew their policies without any breaks. However, if there is any discontinuity in the policy due to delays on the insurance company’s part, it will not be considered as discontinuity and the portability can continue.
Those who wish to opt for health insurance portability must notify their decision to the current insurance company in writing, and mention the company they wish to port to. This intimation must be provided 45 days before their existing policy is due for renewal.
IRDA’s circular on Portability of Health Insurance clearly states that the portability request must be filed with the new insurer 45 days before the existing policy expires, otherwise it may be rejected.
Insurance companies have to acknowledge portability applications within three days.
Health insurance portability does not involve any porting charges.
Premiums and Bonuses
Insurers are free to levy premiums as per their specific underwriting norms, and hence premiums may not remain the same even for similar coverage. Those in the high-risk category may have to pay a higher premium after porting.
Applicants are allowed a 30-day grace period for policy renewal, in case porting is still under process/new insurer’s decision is pending. To avail this extended coverage, policyholders need to pay a pro rata premium to the current insurer. IRDA guidelines say that in such a scenario, policyholders cannot be forced to pay the entire year's premium.
Policyholders could opt to increase the minimum sum insured when they port. While it is true that approval of the increased sum is subject to acceptance by the new insurer’s underwriter, it is also true that new insurers have to provide at least the minimum insurance equal to the old policy’s original sum insured.
Pre-existing Diseases Waiting Period
If you apply for an increase in cover, the entire pre-existing diseases waiting period has to be served. If the previous insurer has a three-year waiting period, and you have served it, but the new insurer mandates four years, you need to serve one additional year to get pre-existing diseases coverage under the new policy.
Shifting Plans within the Same Company
Policyholders can port out from one plan to another plan within the same company.
Note: The regulator lays down that insurers must accept requests at policy renewal or end of the specified exit age by offering suitable credits for all previous policy years, provided the policy is continued without breaks. It has also been laid down that the new insurer should allow the credit gained by the insured for pre-existing conditions’ waiting period. This applies when an individual moves from one insurer to another and also when an individual makes a switch from one plan to another with the same insurer.
Reasons for Rejection of Portability Requests
IRDA has given insurers the authority to reject a portability application, if it is not line with the company’s terms, conditions, and policies.
Further, portability applications may be rejected on grounds of:
- Inadequate information
- Delays in document submission
- Poor claim history - Insurers are suspicious about portability requests where multiple claims have been made recently
- Major differences between inclusions, exclusions and other features between the current policy and policy the customer wishes to port to
- Non-availability of previous policy documents –Policy documents for at least last three years must be preserved
- Break in policy renewal
All portability requests are considered new and put afresh through all underwriting guidelines, during which, the underwriter measures the risk exposure/customer risk profile and accordingly determines the portability terms and premium to be charged. The underwriter reserves the right to reject any proposal on the grounds they find valid.
Note: Underwriting norms, terms and conditions, and reasons for portability rejection may vary from company to company.
Other Important Grounds of Portability Request Rejection
Senior citizens have fewer options when it comes to health insurance policies that offer adequate cover for age-related diseases. Only a few insurers cover older people because the likelihood of falling ill increases with progressing age. In most cases, insurance companies avoid accepting portability requests from senior citizens.
While some insurance companies accept people in the 60-69 age group, most companies do not consider portability requests from customers who are 70+ years. Either way, in case of a portability request for senior citizens, insurance companies may act fussy, apply stringent underwriting rules, in most cases charge high premiums and ensure high premium loading, and may also apply a co-payment clause.
Unfavourable Health History
As a rule, applicants aged 45+ years must mandatorily go through medical tests. The policyholder may have been healthier inhis/her younger years when the policy was initially purchased, but if he/she contracts a disease later that the new insurer does not cover, the portability application could be rejected. Even minor illnesses that could get serious later, lowers chances of the portability request being accepted. However, current insurers cannot refuse policy renewal even if serious ailments get detected after policy purchase.
A history of hypertension, diabetes, cancer, and other such serious illnesses in the applicant’s medical reports will lead to the application being categorised as ‘high risk’ and lead to outright rejection. This holds true for pre-existing diseases and any other chronic ailment that requires ongoing treatment, regular medication and involves high recurrent costs, because this translates to multiple claims.
Porting Out of a Floater Cover
If a policyholder tries to port out of a floater cover, the insurance company may get doubtful. This is because such requests usually come from individuals who have an adverse health declaration and hence, wish to enhance the cover. Therefore, portability request from a customer who wants to port out a single member from a floater cover with a higher sum insured than what is available under the existing policy is likely to get rejected.
Let’s check out what documents are required for health insurance portability.
List of Required Documents For Portability of Health Insurance
From previous insurer
From new insurer
Previous years policy certificates
Filled proposal form
Latest renewal notice with a clear mention of coverage continuity, etc.
Filled portability form
Self-declaration by policyholders in no-claim cases
Documents like discharge summary, investigation report, etc. if any claims have been filed
Now that you have all the required documents in place, it’s time to find out what’s the process of health insurance portability.
Process for Insurance Portability:
- On receiving the portability request, the new insurer provides a proposal and a portability form, and gives details of various available products.
- The policyholder must select a suitable product, and submit the duly filled proposal and portability forms to the new insurer.
- After the new insurance company receives the forms with the details, they approach the previous insurer or log on to the IRDA website to check details like applicant’s claim history, medical records, etc.
- The existing insurer must furnish all requisite details through IRDA’s common data-sharing portal within seven working days. In case of delays in sharing this information, the new insurer can hold the porting request acceptance in abeyance.
- Once the new insurer receives all the information, they decide on underwriting the policy within 15 days. If the new insurer does not take a decision within this period, they are bound to accept the portability application.
You might be wondering:
What if you’re porting out from group health insurance policies or family floater policies to an individual health cover?
Porting from Group Health Insurance or Family Floater to an Individual Health Cover
Those covered under employer group health insurance policies or family floater policies may port to an individual health cover. However, they first need to switch to a plan offered by the current insurer. Switching to a new insurer of the policyholder’s choice is permitted only after one year.
Before making the final switch, it is recommended that you understand the product being ported to and its differences with the previous policy in terms of sum insured slabs, pricing, entry age restrictions, renewal limit, sub-limits, capping, waiting period, co-payment and pre-existing diseases clauses, hospital network, etc.
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