You can port your policy with the same insurer or switch to a new insurer
Health insurance is one of the protections that people need for the longest period of their lives, often throughout their lifespans. During the coverage period, there might be many occasions when people find the need to change their insurance provider. This could be due to some deficiency in the product and the service of the existing company or because another insurance provider has a better product and service. This is where porting comes to the rescue. “Portability is the facility provided to policyholders who wish to change their policy from one insurance company to another. It is also applicable for policyholders wishing to migrate to another product offered by the same insurer,” says Nitin Deo, Chief Technical Officer, Zuno General Insurance. How transfer of waiting period works when you port your health insurance policy
Most insurance policies allow the insured to claim all the benefits of the policy only after a waiting period. So, if a person is porting to a new policy after completing the waiting period under a health insurance scheme, can the waiting period be waived?
“As per the guidelines set by the IRDAI (the Insurance Regulatory and Development Authority), insurance companies are expected to pass on the credit gained by the insured for pre-existing condition(s) in terms of waiting period,” says Deo. So, the waiting period will not get wasted but will be duly utilised in the policy. Now let us understand how this transfer of accumulated benefit works.
New policy gives you benefit on pro rata basis: You can get transfer the benefit which is already earned. “If one has completed the waiting period under one health insurance policy, the same time of waiting period can be waived when porting the policy to a new insurer. Most insurers allow carrying forward the waiting period served under the previous policy,” says Rakesh Goyal, Probus Insurance Broker. “Portability implies that the benefits you’ve gained in your previous policy, including waiting periods, are transferred to your new policy,” says Siddharth Singhal, Business Head-Health Insurance, Policybazaar.com. “For instance, if you have completed 4 years (typical waiting period for most policies) with Policy A and switch to Policy B, you won’t be required to fulfill the waiting period again.” However, if you have completed only a part of the waiting period, you will get partial benefit and may be required to complete the remaining waiting period with new insurer.
Therefore, you need to be careful when porting the health insurance policy to make sure that you get the due benefit of the waiting period spent with the current insurer. “The process of portability usually begins 45 days prior to the renewal. Once the new insurer accepts the proposal of the policyholder, all waiting periods applied by the new insurer are applied after deducting the number of years the expiring policy has been continuously renewed,” says Deo.
What happens to no claim rewards when porting your health insurance policy?
Many policies also offer no claim rewards in some form or the other. So what happens to these accumulated rewards when you port your health insurance policy?
When both old and new policies offer similar rewards: If both policies offer similar rewards in additional sum insured, you can transfer these benefits while porting? “Yes, if both policies offer similar no-claim bonuses in terms of additional sum insured, one can transfer these benefits while porting to a new insurer. The new insurer will honor the no-claim bonus accrued under the previous policy,” says Goyal.
When you switch to a policy with lower sum insured: You will get a lower benefit if your new basic sum insured is lower than the accumulated sum insured in the old policy. “If I currently hold Policy A with a base sum insured of Rs 5 lakh and have earned Rs 2 lakh in bonuses, my total coverage is Rs 7 lakh. If I switch to another policy that has a base sum insured of Rs 5 lakh, my waiting periods will be carried forward on the Rs 5 lakh only,” says Singhal.
When you go for higher sum insured with the new policy: When you go for a higher coverage under the new policy, you will only get the proportional continuation benefit in the new policy. “If I opt for Policy B with a Rs 7 lakh base sum insured, my waiting periods will be carried forward on the full Rs 7 lakh (comprising the base and bonus). In the scenario where I choose Policy B with a Rs 10 lakh base sum insured, my waiting periods will still be carried forward on Rs 7 lakh (comprising the base and bonus), and not on the increased Rs 10 lakh,” says Singhal.
Premium will be adjusted to new sum insured: When you carry forward the accumulated sum insured, the new insurer will calculate the premium for a higher sum insured. “It is important to note that the premium payable will be as per the higher sum insured, which is the previous sum insured plus the cumulative bonus accrued,” says Deo.
Not all benefits can be carried forward to the new policy
Typically, waiting periods completed under one insurance policy can be transferred when switching the insurer. However, not all benefits can be carried forward to a new policy. “Other aspects like room rent limits and annual health checkups are subject to the specific plan offerings of the second insurer,” says Singhal.
If you port your health insurance policy, check the implications on accumulated benefits with the old policy so that you can ensure that these are not wasted. However, if you find a new policy to be attractive enough in many other aspects — such as superior qualitative features and if it serves your long-term interest — then you can consider making the switch even if there is some loss of accumulated benefits.