Here's how to port your health insurance policy to retain waiting period benefits

Is porting your health insurance policy to another insurer worthwile?

Policyholders who are dissatisfied with their health insurance companies due to exorbitant premiums or flawed claim settlement processes are often on the lookout for better options.

However, discontinuing an existing health insurance policy because of high premiums or fewer benefits with the intention of buying a new plan later is fraught with risk. For one, you could be hospitalised in the intervening period when you do not have a cover, which means that you will have to meet the expenses out of your pocket.

The wiser approach is to ‘port’ your policy to another insurer. It eliminates the risk of being without a cover during the period of transition and, more importantly, allows you to retain continuity benefits such as pre-existing diseases waiting period credit. Here’s a look at the advantages of porting your policy—basically, changing insurers—the nitty-gritty of the process and its limitations.

Also read: Pay higher premiums on making claims: Why this new health insurers’ proposal is anti-consumer

How does portability work?

In July 2011, the Insurance Regulatory and Development Authority of India’s (IRDAI) long-awaited health insurance portability norms came into force, allowing policyholders to change insurers if they wanted to. It has not exactly taken off the way policyholders and independent insurance experts had hoped for, but the fact that the option exists is a source of comfort for many.

Portability allows policyholders to switch from one insurer to another without losing out on continuity benefits earned in their existing policy. Most policies cover pre-existing diseases—those that you contracted before you bought the policy—only after an initial ‘waiting period’ of up to four years.

Some senior citizen policies cover pre-existing ailments after one or two years, too. Then, there are conditions such as hernia or cataract that are covered in the first policy year. If policyholders buy fresh policies, they will have to serve the waiting period all over again. Portability offers a way out.

What are the advantages of porting instead of purchasing a new policy?

To understand portability better, it is important to first understand the hurdle of pre-existing illnesses that plays spoilsport in making a successful insurance claim.

When you buy an insurance policy, it doesn’t mean you can make a claim immediately or sometimes, even a few years down the line. This is because you might have been suffering from an illness or a medical condition at the time of buying the health insurance policy. This is referred to as a pre-existing illness.

As per IRDAI guidelines, pre-existing diseases can mean any condition, ailment, injury or disease that is diagnosed by a physician within 48 months prior to the policy being issued or for which medical advice or treatment was recommended by, or received from, a physician within 48 months prior to the effective date of the policy or its reinstatement.

This is where portability can help. When you port from one policy to another, the waiting period doesn’t start from scratch. Let’s say your policy comes with a waiting period of four years for pre-existing diseases. If you were to switch after, say, three years of holding the policy, your new insurer cannot insist on a waiting period of more than one year. This concept is referred to as the waiting period credit. If your policy is over four years old, your new insurer will have to start covering your pre-existing diseases immediately after the policy is purchased.

On the other hand, if you were to simply buy a new policy and dump your existing one, your pre-existing diseases will be covered only after you serve the waiting period, ranging from one to four years, all over again. In the case of porting, the insurer will have to offer at least your existing policy’s sum insured. You can opt for a higher sum insured too, but the waiting period credit will not be applicable for this increased amount.

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Will the new product’s features and premiums be different from those of the existing policy?

Yes. The new insurer’s product features, clauses and premiums will be applicable. You need to be aware of these terms before you proceed.

Who should look at porting policies?

You should consider porting in case you have had a disappointing experience at the time of claim settlement and policy servicing or if your premiums have seen an exorbitant hike. You should also consider switching if you purchased your policy several years ago and now find that products with wider benefits and value-added services are available.

Ensure that you check room rent sub-limits, disease-wise capping and cumulative or no-claim bonuses before moving to a new policy.

Likewise, employees who resign or are laid off can convert their group policy into retail cover at the time of exit. If you are not covered under any policy except your employer’s scheme, this is a facility you must make use of, as buying a fresh policy will mean losing out on the waiting period credit. In the first year, you can only port to the retail policy of your group insurer. Later, you can switch to any insurer of your choice. Do remember, however, that accepting your application will be at the insurer’s discretion.

How is the process different from buying a fresh policy?

Step one is to identify the new insurer you wish to port to, after studying its products, premiums and cashless hospitals network. You need to approach your current insurer at least 45 days before your renewal due date, expressing your intention to port out. Porting can be done only closer to the renewal date. You will also have to specify the new insurance company you wish to shift to.

Next, you have to submit your proposal to the new insurer you have zeroed in on, making a request for porting your policy. In addition to the regular proposal form that you have to fill up for any new policy, you will also have to submit a portability form. This would contain your health status as also your previous policy’s details and your claim record. Your existing insurer will also share these details with your new insurer. However, do not make the mistake of not declaring your health conditions on the assumption that your existing insurer would have shared the details with the new company (the one you are porting your policy to).

The insurer evaluating your port-in request will have to make an assessment and take a call in 15 days. Neither the existing insurer nor the new one will levy any charges for processing your portability request. If your application is rejected, you can continue to stick to your existing insurer.

How easy is it to port to a new policy?

The process laid out might be simple, but quite difficult in practice. Senior citizens, who are more likely to have encountered disputes related to claims, rarely find takers among insurance companies, given their advanced age and the increased likelihood of chronic ailments that could necessitate frequent hospitalisation.

On the other hand, insurers are willing to accept portability requests of young, healthy individuals, but the latter might not feel a compelling need to switch as they are unlikely to have had disturbing claim experiences at that age.

For those with pre-existing diseases, however, the process will be as difficult as buying a fresh policy at that stage.