Not happy with your health insurer? Just port out—lock, stock, and bonus

Buying a health insurance policy is crucial for your financial well-being. But sometimes, our insurance companies disappoint. You may be unhappy with its services because the claims settlement didn't go as smoothly as you’d hoped, or for any other reason.

One option is to buy a new health insurance policy and let go of the old one. The problem here is that you will lose all the accrued benefits, and will again have to wait for up to four years for your pre-existing illnesses to be covered.

There is a better alternative. You can simply port your insurance policy to another insurer, just like how you port your mobile number from one telecom provider to another.

Since 2011, the insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), has allowed policyholders the right to port their policies if dissatisfied with their current service provider, or for any reason at all.

Porting allows you to retain the accrued continuity benefits—the waiting period credit and cumulative bonus earned that enhances the sum assured —when you switch to another insurance company.

The porting process has been eased over the years. “Twenty percent of policyholders port out now, as against 8-10 percent a decade ago,” says Siddharth Singhal, Business Head, Health Insurance, at Policybazaar.com.

But here’s the rub. Not all porting requests are accepted. It depends on the insurer’s underwriting process, which determines whether the insurer wants to take on the risk and at what price (premiums), as per its guidelines. This is because for the insurer, it is a new proposal, and hence it will be evaluated like any other health insurance application.

What does portability mean?

According to IRDAI provisions, portability allows policyholders to switch from one insurer to another without losing out on the accrued benefits in the existing policy. This includes cumulative, or no-claim bonus (NCB), and waiting period credit for pre-existing illnesses.

Most health insurance policies come with waiting periods of one to four years before they cover the treatment of pre-existing illnesses. When you port your policy, the new insurer typically gives you the credit for this waiting period. In simple words, if your original policy has been in force for, say, two years, then two years are waived from the waiting period of the new policy.

“The benefits ported can be to the extent of the sum insured (including no claim bonus) with the previous insurer,” says Bhabatosh Mishra, Director, Underwriting, Products & Claims, NivaBupa Health Insurance. What this means is: some health insurance policies increase your sum assured for every claim-free year. This no-claim bonus gets added to the existing policy’s sum assured, which is the sum the new insurer will cover you for.

However, Mishra says that if you want to increase the sum assured (including NCB) in the new policy, then that’s a different story.

For instance, say you have a medical cover of Rs 5 lakh and have accumulated NCB worth Rs 1 lakh (total sum assured Rs 6 lakh). However, while porting if you want to enhance the sum assured to Rs 15 lakh, the porting benefits (like waiting period credit) will apply to only Rs 6 lakh. The balance will be treated as a fresh policy, which means the waiting period credit will not apply to this amount.

When can you port your policy?

You can only port your policy at the time of renewal. Typically, health insurance policies are renewable for a lifetime but they are annual contracts. This means you’ve got to pay the premium every year. To be sure, your health insurer can increase the premiums. However, some insurers give you the option to pay the premium for three years in one go.

Ordinarily, this is good. But if you want to port your policy, this can be a bit of a bother. If you’ve already paid premiums for three years, then you’ve got to wait till the three years are over before you can port out.

There is no limit to the number of times you can port your policy.

Which product should you choose?

Typically, insurance companies offer you a host of products when you wish to port in but your chances of a smooth transfer go up if you choose a policy similar to the one you had earlier.

“In case there are significant differences in the new policy’s inclusions and exclusions, the likelihood of getting rejected by the new insurer increases,” says Naveen Kumar Midha, Executive Director - Health & Benefits, Global Insurance Brokers Pvt. Ltd. This is because they are likely to compare it with the policy you currently have, he explains.

How to port your policy?

To improve your chances of timely porting, get in touch with your new insurer at least 45-60 days prior to the expiry of your existing health insurance policy. Choose your new policy, fill up the porting form with details of the existing policy and your personal information, and submit it to the new insurer along with the completed proposal form.

If your new insurance company doesn’t wish to onboard you, it has to inform you within 15 days. In which case, you have a 30-day grace period to renew your old/existing policy. If the new insurer fails to inform you on time, it is bound to accept your application.

“The new insurer might at times issue a new policy instead of porting the existing one. It is important to check all the documents carefully while porting,” says Mahavir Chopra, Founder, Beshak.org.