Insurance products involve long-term commitment and therefore, require careful examination prior to a purchase. This is even more true in case of health insurance wherein the relationship between the insurer and the insured is meant to last for at least a couple of decades. But in cases where due diligence has not been exercised by the insured or there is dissatisfaction with the service provided, porting can be an option. While IRDAI has introduced the facility to port since 2011, the process may not be simple and will most likely cost the insured higher premiums as well. You are therefore, better off exercising due care prior to the purchase of insurance, and going for porting only after a detailed cost-benefit analysis. .
Health insurance, unlike term insurance, cannot offer comprehensive protection from day one of the purchase as pre-existing diseases are only covered after 2-4 years. Porting helps you transport the residual waiting period so as not to undergo the waiting period again with the new insurer. This is the most prominent feature of porting compared to a simple replacement buying, and most likely the only reason as well. The common reasons for considering porting may range from lower claim receipts versus expectations to higher co-payment, poor service, longer than expected list of disease exclusions to better features/pricing at other insurers.
You must confirm the comparative benefits of porting before the shift, as further requests for porting may face tougher underwriting standards or even rob one of insurance protection in extreme cases.
Insurance policy porting process
The process of porting must be initiated 45 days prior to the premium renewal payment date to ensure sufficient time at both ends for migration and no over-lap or gap in premium coverage. The current insurer must also provide a grace period of 30 days for premium payment if insurance porting is underway to avoid double-payment. The insured must present a written application to the existing insurer for porting which includes the name of the new insurer as well. Porting is a time bound process stipulated by IRDAI and the new insurer, informed by the old insurer, must complete the application processing in 15 days, after which the application must be accepted. The insured meanwhile collects the policy documents, portability form and other relevant details. This also includes a certificate detailing any ‘no claim bonus’ from the present insurer, which can also be ported. No-claim bonus is the reward shared with the insured on not claiming health insurance during a year. As it scales over the years to a significant value, the ability to port the same is as crucial as porting the waiting period. While you are not charged for portability by either party, the destination insurer can reject the application based on factors such as age, medical history or medical check-up results.
Time-bound exclusions such as waiting period for pre-existing diseases and accumulated ‘no claim bonus’ get ported. All other terms and conditions including the premium will be at the discretion of the new insurer and may be at a higher cost. For instance, premium for a health policy issued at the age of 30 and ported at the age of 33, will be inflated by two components, age risk and normal inflation. Also post the pandemic, re-insurer premiums have shot up which can add to your premiums, if you port now.
Changes in underwriting
In health insurance, underwriting or risk analysis, involves a review of the medical history records, health check-up and basic financial profile, based on which pricing is determined. Underwriting norms at the destination insurer will be according to the policy chosen. This implies that even as the waiting period served under the older policy can be carried forward, it will still be subject to the requirements of the new policy. A policy which is similar between the old and the new insurer can minimise any additional underwriting. For instance, choosing mediclaim policy at both the insurers will smoothen the process. Also, the insured must ensure four or more years of uninterrupted coverage under the old policy to ensure smooth portability, with minimal underwriting. The age of the insured is also a critical factor for underwriting standards. Those porting beyond 60 years will most likely face tough underwriting standards and may even be excluded for coverage.
Migration from group coverage to individual coverage is also possible. IRDAI guideline also states that an option of migration must be presented at the time of exit from group policies to either individual or family floater plans. But the vast difference in underwriting standards for the two (underwriting at group level is much more relaxed) would most likely result in the request for portability becoming akin to purchasing a new policy itself.