Slate. All you wanted to know about portability in insurance

The outbreak of the Covid-19 pandemic has highlighted the importance of having an insurance policy. Many insurance covers, particularly health covers, are constantly updated to address new and emerging health issues. If policyholders want a health policy with wider coverage, then they can use the portability option to switch to a new policy, instead of buying multiple policies.

In 2011, the insurance regulator IRDAI allowed porting of health insurance policies. Portability is the process by which you as a policy-holder can transfer your current health policy to another health policy with a different insurer or to a different policy of the same insurer. Through this process, you can also carry the current benefits to the new health policy. The policy-holder is also qualified to transfer all the continuity benefit such as free medical check-up and no-claim bonus (accumulation of points or reward given by an insurer to a policy-holder for making no claims during the policy term), which were acquired during the previous policy.

The porting option is available for individual as well family-floater policies issued by non-life insurers. Policy-holders can even switch from group insurance to an individual health plan, without compromising on the benefits of the previous health policy.

Reasons to port from one insurer to another can include bad service, higher co-payment (cost-sharing arrangement where the policy-holder pays a certain percentage of the claim from his/her pocket) or higher sub-limits (cap on coverage for a particular treatment), increase in family members (spouse or children), and availability of better coverages and cashless facilities.

Portability of the health policy comes with key benefits. One, if a policy-holder has already served the initial waiting period (30 days), the pre-existing waiting period (ranging from 24-36 months) and the disease-specific waiting period, then it will be waived in the new policy.

The no-claim bonus that you have accumulated can also be ported. However, do keep in mind that when you port, the premium will be calculated on the higher SI; including the NCB.

One of the biggest benefits of porting your health policy is that you get the latest policy which usually comes with wider coverages and better benefits such as reward points for a healthy lifestyle, wealth benefits (such as higher points for being fit), OPD covers, telemedicine and counselling. And porting procedures these days are made fairly simple and can be done online with minimal documentation requirements.

While there are advantages to porting a health policy, there are downsides as well. If you as a policy-holder decide to port your existing health policy, keep in mind that you have to port at least 30 days prior to the premium renewal date of the health policy, and not during the policy. You can only port between similar policies. For instance, if you have a regular health policy, you cannot port to a critical illness policy.

Also, the policy-holder might be subject to medical-check up as well. If the policy-holder is continuously covered in the previous policy without any break for four years or more, migration shall be allowed without any underwriting/medical checks (to the extent of the sum insured). Further, for the same SI, your premium payment may increase in case of any new health complication or higher age.

Note that there are chances that your new insurer may reject your porting request if your health status does not match their terms and conditions.

Whether you port or not, it’s best to know your rights.

A weekly column that puts fun into learning

COMMENT NOW