How to port a health insurance policy

You can change your car insurer and port the no-claim bonus from the old insurer to the new. But did you know you can port your health insurance policy too? You can change your insurer at the time of renewing your policy and port credits on waiting period and no-claim bonus.

“You should port a health insurance policy if it is very expensive or is laced with caveats such as caps on room rent,” said Abhishek Bondia, principal officer and managing director, SecureNow Insurance Broker Pvt. Ltd. Use the Mint SecureNow Mediclaim Ratings to analyse your policy and read this to understand the basic features of a good health insurance policy.

And if you wish to port your policy, read on to know the process.

What can be ported?
You can port similar health insurance policy from one insurer to another. “All health insurance policies, including floater policies issued by general and health insurers, allow portability. However, only similar health policies can be ported,” said Rajiv Kumar, managing director and chief executive officer, Universal Sompo General Insurance Co. Ltd. “Those covered under group health insurance can migrate from their group policy to an individual policy with the same insurer first and subsequently to another insurer,” he added. You can port credits on time-bound exclusions and no-claim bonuses. “A customer has the right to port his existing policy from the existing insurer to a similar policy with any other insurer of his choice with continuity of benefits in terms of waiting period and no claim bonus,”said Upendra Namburi, chief innovation and marketing officer, Bharti AXA General Insurance Co. Ltd.

There are three kinds of waiting periods in a health policy. The first is typically a 30-day waiting period and it applies immediately after purchase. During this period, other than hospitalization due to an accident, insurers typically don’t accept claims on account of an ailment. Second is the waiting period on pre-existing ailments, which can extend up to 4 years. And third is the waiting period on specified ailments. For instance, if hernia is excluded for the first 2 years, then even if a policyholder develops it after buying the policy, it will not be covered for 2 years.

Such time-bound exclusions can be ported. For example, if you bought a health insurance policy and decide to port it after 3 years, and the new policy has a waiting period of 2 years on pre-existing ailments, since you have already covered 3 years in the previous policy, the 3-year credit gets ported to the new policy, and the new policy will have no waiting period.

You can also port the no-claim bonus. “Suppose you have a sum insured of Rs3 lakh and a no-claim bonus in 4 years bumps up the sum insured to Rs3.2 lakh. Portability will be applicable on the entire sum insured of Rs3.2 lakh,”explained Reshma Goregaonkar, senior manager, product development-health, SBI General Insurance Co. Ltd. However, the new insurer will charge you for a sum insured of Rs3.2 lakh and not Rs3 lakh. Also, you can port only to the extent of the sum insured (including any no-claim bonus) with the previous insurer. So, if the sum insured is Rs3 lakh, then you can port the benefits only for Rs3 lakh, and if you buy a cover of Rs5 lakh, then on the remaining Rs2 lakh no portability benefits will apply.

What if the new policy has extra bells and whistles? “If there are additional features and the insurer accepts portability, the extra features will be available from day one. However, if there is a waiting period (such as for maternity), then it will apply,”added Goregaonkar.

Process of portability
Portability applies at the time of renewal. The policyholder needs to apply for it at least 45 days before expiry of the existing policy (but not before 60 days of its expiry).

The policyholder needs to fill the portability form, which asks for details of the existing policy along with others. “We get the details of the customer from the portability form and feed it into Irdai’s (Insurance Regulatory and Development Authority of India) portal. Through the portal the existing insurer provides the coverage and claims related details of the customers,” said Goregaonkar. “The insurer needs to get back to us in 7 days with this information and we need to decide within 15 days,” she added. If an insurer fails to meet this deadline, it will have to compulsorily accept your application.

Problems in portability
Portability is good news if you are stuck in a bad policy but it is not availed by many. “At an industry level, less than 5% of the policyholders port their policies. Customers normally realize the need to port after a claim is made. As most claims are made due to lifestyle ailments, a new insurer may refuse portability as its underwriting criteria may kick in,” said M. Ravichandran, president, insurance, Tata AIG General Insurance Co. Ltd. “Besides agents not getting remuneration for portability cases is also another reason,” Ravichandran added.

Given that insurers have full discretion to accept or reject a portability request, portability faces many challenges. “Typically, if customers have made a claim, the new insurer will not accept porting. It may give a counter-offer excluding the ailment on which the claim was made, in which case porting the policy doesn’t make sense,” added Bondia.

In practice too, such portability requests are seldom accepted. This is why, you need to proactively port a policy while you are healthy. After a claim is made, or if you are diagnosed with an illness, portability become difficult.