Yesterday, I was left outside the hospital with a half-good leg, waiting for the app-booked cab. And after a 25 minutes wait, I was cheesed off enough to want to order from another app. You could call it fickle-mindedness, but it was just plain bad service lacking accountability! So, if you have been stuck with a health insurer, wanting to change to another for whatever may be your reasons (bad service, lack of options in the current one, strict and non-flexible guidelines), feel better to know that you’re not at the wit’s end of your last straw!
What is portability of your insurance policy?
Portability is that which allows you to switch between insurers without having to worry about losing benefit (like no-claim-bonus) or sit out a waiting period that you may have already completed with your previous insurer. I specify on health insurance because regulations allow portability only for health policies by non-life insurers. This feature is what will allow you to move to an individual policy or a family floater, if you’ve been covered under a group policy until now and decide to change jobs. Let’s call it the best of having both worlds!
Some important portability guidelines for you
As you’ve probably heard enough already, health insurance is a long term decision. So, a decision as calculative as choosing the right policy and then switching to a different insurer comes with the responsibility of some guidelines.
The 45-day notice period: Your application for portability should be made 45 days before your existing policy expires.
You should know that portability is not guaranteed. Sandeep Patel, MD and CEO of Cigna TTK, says: “The new insurers may decline the proposal if the risk is not acceptable as per its underwriting policy.”
The new-insurer’s acceptance period: It’s not all rules for us after all; it applies to the insurer too! The new insurer is expected to respond to a portability request within 15 days of receipt of the proposal. If there is a delay in the processing of the proposal and you’re due to renew the old policy, then the onus lies on the new insurer to request your current insurance company to provide you insurance for a short period of up to 30 days from the due date. The premium paid by you to the existing insurer for this short period will be calculated on a pro-rata basis.
Underwriting process: The new insurer may accept your proposal only if it is in line with their underwriting norms. If you’ve clean slate for pre-existing illnesses and have maintained a claim-free policy, the company would love you for it and charge the nominal premium. But in the event of any of these two, they could charge additional premium. Or they could go one step ahead on the nasty scale and refuse you a policy altogether, if you do not fall under their underwriting guidelines.
Though you can always go back to your old insurer in the mid-way process of porting, as we’ve always emphasized, don’t allow premiums to be the sole reason to choose the right health decision.
Waiting period clause: The most advantageous feature of policy portability, this clause allows you to switch over to the new insurer without having to wait out entire waiting periods all over again. Sounds twisted? Let me explain. Say, in your current policy, you have waiting period of 2 years for diabetes or hernia or kidney stones and you’ve completed one year already. The new insurer, on the condition of proposal acceptance, will expect you to wait out only the remaining one year and not the entire period. If, for the mentioned or other specific ailments, the new insurer has a 3 year waiting period, then you might be expected to wait out 2 years. On a different note, if you’ve completed the 4 years of waiting with your current insurer for your pre-existing ailments, then you’d be covered immediately by the new insurance folks without having to wait any longer.
Policy continuity: Policy will be denied if there is a break in the policy. Meaning: it is important that you port your policy before your existing one expires. You could earn brownie points with the insurer you’re applying to by being prudent and maintaining a clean record of all documents like renewal notices and policy certificates which certifies your continuity of coverage.
What you may lose out on, in portability
- There is no standardization of policy wordings in the industry. If you’ve been holding a 1 lakh policy and the new insurer you are shifting to doesn’t offer coverage below 2 lakhs, then you could end up paying a higher premium.
- Also, you may lose out on the accumulated no-claim-bonus. You may be able to carry out your NCB to the new policy, but your premium will be calculated on the enhanced cover. Say you have been paying a premium of Rs.1000 for a one lakh cover. And, because you haven’t made any claims, NCB enhanced your sum assured to 1.3 lakhs for the same premium of Rs.1000. When you switch your insurer, the coverage will be calculated at 1.3 lakhs and you may have to pay up a higher premium (may be Rs.1300) as your premium, thus losing out on the discounted premium.
Your portability in 6 simple steps
Step 1: Like mentioned earlier, apply to the new insurer 45 days before the existing policy runs out.
Step 2: On receiving the application, the new insurer will expect you to fill out your portability and proposal forms. Fill ‘em right up! And submit!
Step 3: The new insurer will have to check your details (like medical and claim history) with the existing policy’s insurer and they would do it within a 7 days period.
Step 4: The insurance company will now pass on the required information through IRDA’s portal in the format prescribed by the regulator for shifting the policy.
Step 5: When the new insurer receives the required information, they will frame the proposal in accordance to their underwriting norms.
Step 6: The new insurer will process and give you their proposal in 15 days. But wait, there is a sunny side to this! If this is not done within this 15 days period, despite receiving all the required information, they will be bound to accept the policy-porting.
When you should consider porting your policy
You might be unsatisfied with your current insurer that’s prompting you to look at other options. But before you make the call make sure you consider all aspects such as sub-limits, no-claim-bonuses, ease of claims procedure etc. Young people are unlikely to have made much claims and can switch easily as they would come under the non-medical category. Their policy would be ported immediately. Even if you’re over 45 years with a clean medical history, it’s advisable to get a thorough medical test done before applying to port your policy. Because if an abnormality is then detected, you could stick to their old policy instead of having to face rejection or an increased premium with the new insurer. And since you’ve already completed any or all of your mandatory waiting period, you can just take additional cover for any ailments that have come up – you’re assured of getting claims from your old insurer who is aware of your health history.
Must Read: Health Insurance Portability: All you wanted to know