Pros and Cons of Health Insurance Portability

Despite the provision of a 15-day free-look period by health insurance companies, it may not offer sufficient insight into potential drawbacks of the policy or the insurer. There are numerous reasons why individuals might be dissatisfied with their current health insurance policy and opt for a change in the insurance provider. Recognising this need among policyholders, the Insurance Regulatory and Development Authority of India (IRDAI) introduced health insurance portability in 2011.

But is it really a good idea to port your health insurance policy? This article helps you make the right decision as it explains the pros and cons of health insurance portability.

What Is Health Insurance Portability?

As discussed, the Insurance Regulatory and Development Authority of India (IRDAI) permits the option of health insurance policy portability for individuals dissatisfied with the features of their current policy. Health insurance portability enables policyholders to transfer their policy from their existing insurer to a different insurance provider without forfeiting the benefits of their current policy. This feature also allows for a switch from an individual health plan to a family floater health insurance plan, contingent upon the underwriter's approval.

Although health insurance portability has gained widespread acceptance in the motor industry, it is now extensively offered by all health insurance providers in India. The process of transitioning from one insurer to another without losing continuity benefits, such as coverage for pre-existing conditions and maintaining waiting periods, is called porting the health insurance plan.

The portability is applicable for all the indemnity-based Individual health insurance policies, family floater health insurance policies, and group health insurance policies. The IRDAI or insurers do not charge any fee for providing the portability facility in Health Insurance.

Porting of health insurance includes the transfer of:

• Current sum insured

• Current insured members

• Accumulated No Claim Bonus

• Covered pre-existing diseases waiting periods

• Covered specific diseases waiting periods

• Maternity benefit waiting period

What Are the Pros of Porting Your Health Insurance Policy?

1. Improved Service Quality:

Shifting to an insurer with a reputation for excellent service can enhance your overall experience, from policy acquisition to claim settlement.

2. Transparency in Policy Terms:

Switching insurers can be beneficial if your current policy has hidden terms and conditions that impact your coverage negatively.

3. Efficient Claim Settlement:

Porting allows you to move to an insurer with a faster and more efficient claim settlement process, addressing issues associated with a slow or inadequate process.

4. Potential Cost Savings:

Switching to a competitor with lower premiums can offer you the same benefits at a more affordable cost.

5. Customised Coverage:

During the porting process, you have the option to increase the sum insured and extend policy coverage, contingent upon approval from the new insurer. Porting lets you get additional coverage or benefits that your current insurer may not offer.

6. Waiting Periods:

You are exempt from going through the waiting period clause again if it has already been covered in the current health insurance policy. The surviving waiting period will be subtracted from the waiting period of your new policy. However, if the new insurer offers additional coverage with a mandatory waiting period, they must inform you before issuing the health insurance policy.

7. Grace Period:

An additional grace period is granted while your health insurance is still under process. The premium is calculated based on the number of days your old policy was active.

8. NCB:

Your new insurer will grant a premium discount based on the accumulated No Claim Bonus (NCB) from your old policy. This is a significant advantage of porting, ensuring that you retain the benefits of the NCB.

9. Free Service:

The Health Insurance portability service is provided without any charges, and insurers are prohibited from imposing fees for offering this facility.

10. Enhanced Overall Value:

Opting for a new policy with better overall value in terms of offerings can be a wise decision after thorough research and comparison.

What Are the Cons of Porting Your Health Insurance Policy?

1. Porting to the Same Type of Policy:

Portability is permissible only among policies of the same type. This implies that a complete change in the plan, coverage, and policy type is not allowed. For instance, you can port from one basic health insurance plan to another basic health insurance plan or from one top-up health insurance plan to another top-up plan.

2. Porting to the Same Type of Company:

The company to which you are migrating must be of the same type. For example, a shift can be made from a general insurance company to another general insurance company or from a specialised health insurance company to another specialised health insurance company.

3. At the Time of Renewal:

Portability is exclusively permitted at the time of policy renewal and is not allowed at any other time.

4. Increased Premium:

In some cases, when you opt for additional features or coverage, policy premiums may increase during the porting process. Moreover, the new insurer may propose a premium that is higher than the current insurer, depending on factors such as pre-existing diseases and the claim history of the policy.

5. Policyholder Responsibility to Inform the Insurer:

To initiate the Health Insurance portability process, you must inform your current insurer in writing at least 45 days in advance. Additionally, you should specify the name of the insurer to which you intend to switch. The policyholder's responsibility to inform the current insurer at least 45 days in advance adds a procedural burden.

6. Response from the Current Insurer:

Upon receiving your portability request, the new insurer is required to acknowledge it within 3 working days and make a decision within 15 days of receiving all the necessary documents. In the event of any delay, the new insurer must request your current insurer to provide you with short-term insurance coverage. This cover is offered for up to 30 days, and the premium is calculated on a pro-rata basis.

7. Waiting Period Consideration:

Despite the survival of waiting periods from the old policy, specific coverages may still have waiting periods.

8. Careful Consideration:

The process of porting requires careful consideration of the terms and conditions of the new policy to ensure they align with your needs.

9. Time to Familiarise:

The transition may involve some adjustment as you familiarise yourself with a new company's procedures.

How to Transfer Your Health Insurance Policy?

To initiate the process of transferring your Health Insurance, follow these steps:

1. Select an Appropriate Health Insurance Policy:

Choose a health insurance policy that aligns best with your requirements.

2. Place a Porting Request:

Visit the website of the new insurer and submit a porting request. Alternatively, you can make the request offline by visiting the nearest branch or calling the insurer's helpline.

3. Confirmation and Guidance:

Once your request is received, a representative from the insurance company will contact you to confirm the request and provide guidance on the porting process.

4. Receive and Complete Forms:

The insurer will send you the IRDAI portability form and proposal form. Complete these forms meticulously and return them to the insurer along with the required documents.

5. Medical History and Policy Details:

Upon receiving the documents, the insurer contacts your current insurer to obtain your medical history and policy details. Insurers are obligated to share this information through IRDAI for such requests.

6. Underwriting Process:

The new insurer begins the underwriting process upon receiving all the necessary details. During this stage, your profile is analysed by an underwriter who determines whether to approve your insurance proposal.

7. Timely Underwriting:

The underwriting process must be completed within 15 days of receiving details from your current insurer. Any delay is considered as coverage under the new Health Insurance Policy.

8. Required Documents:

A general list of documents to submit during the Health Insurance porting process includes:

• IRDAI portability form

• Proposal form

• Identity proof

• Address proof

• Existing insurance policy (obtained from your current insurer)

• Documents related to medical history (obtained from your current insurer)

• Claim history (obtained from your current insurer)

• Declaration of no-claim, if applicable (obtained from your current insurer)

To conclude:

Buying a health insurance policy necessitates careful consideration, involving an analysis of your lifestyle, family requirements, medical history, and various other factors. Similarly, when porting your health insurance policy, it is crucial to take into account the aforementioned points and thoroughly examine limits, sub-limits, coverage, clauses, inclusions, exclusions, premiums, and exemptions to prevent future disappointments. Opting for online porting of health insurance facilitates convenient policy comparisons and may even offer discounted premiums.

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KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.

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