Usually, a floater health policy, which covers several members within one insurance contract, is considered a good enough protection for the family. After all, it is unlikely that all of them will fall sick at the same time or the same year.
But COVID-19 has changed these perceptions. Many have realised that family floater policies can indeed fall short as multiple members might have to be hospitalised at the same time.
This is how the floater covers work: let’s say the sum insured that you have chosen is Rs 5 lakh and you, your spouse and two kids are covered under the policy. Generally, this would be good enough for a young family. You could be hospitalised in a particular year, while your spouse might undergo treatment after a couple of years. The Rs 5-lakh sum insured would come in handy on both occasions. However, in case a family member contracts COVID-19, it is likely that she might pass it on to others too, rendering the family floater inadequate.
If you have similar thoughts, read this guide to getting the switch to an individual policy right.
Should I buy a fresh individual cover or migrate, or port, to a policy?
Ideally, you must look to switch to an individual policy – either offered by the same insurer or any other insurer – instead of buying a fresh one. You can choose an individual plan offered by your current insurance company or look for another insurer. You will then be able to carry forward your waiting period credit for pre-existing illnesses. This is the key benefit of switching rather than buying a fresh policy.
Most policies cover pre-existing conditions such as diabetes and hypertension after four years of buying the policy. This is known as the waiting period. So, if you were to buy a new policy, you will have to serve this waiting period all over again. Instead, if you opt for porting, it will be much shorter. In fact, if you had purchased your existing policy over four years ago, all pre-existing diseases will be covered from day one. This benefit is more valuable than lower premiums that new policies might offer.
What are the limitations?
The waiting period credit will be applicable only to your existing sum insured under the floater policy. “If you buy a policy with a higher sum assured than the family floater policy, then the additional sum assured will not get waiting period benefits,” explains Kapil Mehta, Co-founder, Securenow.in.
What is the process that I need to follow?
Approach insurers at least 30 days before the renewal date, intimating them about your intent to switch to an individual policy. However, some insurance companies might allow you to shift even if your renewal is less than 30 days away. “There is a porting form that most insurers will ask you to complete before issuing the new policy. Once this is complete, do go back and inform the insurer that gave the family floater cover that it needs to cover one person less. This will reduce your premium in the family floater,” says Mehta. Typically, insurers will communicate the decision on whether or not they will take you on board within 15 days.
Will I have to pay additional charges for this migration or porting?
No. Insurance regulator IRDAI has asked insurers not to levy any charges for this process. However, it’s up to the insurer to decide whether or not to issue the policy and also the premium you have to pay.