Check before porting your health insurance policy

Steven FernandesThe health insurance portability guidelines issued by IRDA on 1st October 2011 has been able to bring relief to lakhs of policyholders who wished to shift from their existing health insurance provider to another company without losing its benefits and continuity. But there are some issues to be considered before you take a decision to port your existing health policy. To quote an example of Mr. Satish (54) who had an existing health insurance policy for a sum of Rs. 2 lakhs. His existing policy had some sub limits for certain illnesses, hence he decided to port his policy to a better one. He was in for a shock when the new company charged him 50% additional premium (known as loading) due to adverse body mass index and high blood pressure levels. Similarly Mrs. Shenoy was told by the new company that they will permanently exclude payments for “ Kidney stones” related problem in her case as she had suffered from this ailment twice in the last 5 years and had claimed from her existing health insurance company. Before applying for portability option one needs to be aware of certain important portability guidelines so that one can take an informed decision and not compromise on the existing coverage. Notice period: Anyone who wants to port his/her policy needs to apply to a new insurer before 45 days from the due date. IRDA has given flexibility to the new insurer to accept the application even if the proposal is submitted within less than 45 days of renewal date. Insurance companies normally insist on medical test for people who are above 45 years of age but for others who are under 45 years with clean health history, the proposal qualifies as a non-medical proposal and hence the application for portability in such cases are accepted even upto 21 days before due date. Therefore one needs to start the application process for porting keeping the above deadline in mind. Period of acceptance by new insurer: Once the proposal form with relevant documents is submitted to the new insurer, communication on acceptance or status of the proposal needs to be given to the applicant within 15 days of submission, failing which the new insurer is bound to accept the proposal. In case there is a delay in processing the application and the due date of the policy is near, the applicant can request his existing insurance company to provide a short period coverage for 30 days from due date and pay a pro-rata premium towards it. Internal policy evaluation process: This is also known as the underwriting process. Each company has its standard underwriting process based on which it accepts or modifies its terms to proposed policyholders. For example the insurance company looks at disclosures on health and also evaluates the medical reports and past history to come at a conclusion. Some companies accept cases if the person is diabetic or has suffered from some serious critical ailments. Such cases are rejected outright. In other cases additional premiums are levied and for some temporary or permanent exclusion are given for certain ailments. The policy holder has a choice to accept the new terms or take a refund and remain with his existing health insurer, provided this is done before the due date of the policy. Waiting period clause: In all health insurance policies there are typically three categories of waiting period clauses which one needs to understand. The first one is 30 days waiting period for fresh policies. The second waiting period clause is for common ailments such as hernia, kidney stones, appendicitis, etc which has a 1-2 years waiting period. The third is a waiting period of 4 years for pre-existing diseases. In case you are shifting from a policy after 2 years of coverage to a new company having the similar waiting periods then you will be exempted from the 30 days and the 2 year waiting periods. Only the 4 year waiting period (now 2 years in this case) will apply. Since you already completed 2 years in previous policy, you will have to wait for another 2 years to claim on any pre-existing ailment. If the new company had a 3 year waiting clause on the common ailments, then you would have to wait for 1 more year to claim the hospitalisation expenses associated with the listed common ailments. What should you do if you are not happy with your current health insurance policyIf your are under the age of 45 years and have a clean health history, you can consider moving to a better health insurer by porting your policy but make sure that you are applying for a sum assured which comes under non medical category of the new insurer. If you are applying for a higher cover which requires medical tests, then it’s better that you first do your complete health check up to ascertain if you are perfectly healthy. For those who are above 45 years of age and have health ailments, it’s advisable for them to retain their existing cover and even increase the cover with the same company if possible. Such policy holders can also apply for an additional cover with other insurers but should retain their existing cover. So as per your requirements you need to take an informed decision before porting your health insurance policy.