Health Insurance Portability - The customer is king again

To get a better perspective of the whole idea of Portability we need to explore how things worked before 01/10/11. Let us say you were a customer, who, had a Health Insurance policy with ABC Company, and were not satisfied with their service. You approach company XYZ to transfer your policy and they would have said that you will be treated as a new policyholder. Meaning, all the benefits you had accrued by regularly paying your premium to the earlier insurer would stand nullified and you would need to build your loyalty from scratch.

The IRDA defines portability as - “The right accorded to an individual health insurance policy holder (including family cover) to transfer the credit gained by the insured for pre-existing conditions and time bound exclusions if policy holder plans to switch from one insurer to another insurer or from one plan to another plan of the same insurer, provided the previous policy has been maintained without any break.”

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From your perspective as a customer, you need to understand two major points from the above definition to realize how it applies to you.

1. Pre-existing condition credit

2. Time-bound exclusions

Pre-existing condition/disease

Then- When one avails of a health insurance policy, he is not given any cover for claims arising out of a disease/condition he/she is ailing from, on the day of taking the claim. Nevertheless, if he/she continues as a regular premium payer for 4 years (48 months), then the insurance company will be bound to pay for claims arising out of the existing condition. In the past, if you shifted from one company to another, you were required to again do a premium paying term of 4 years to claim for PEDs.

Now- With portability, you can carry forward credits gained for pre-existing disease/condition to the new insurer from day one itself.

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Time Exclusions

Then- Time exclusions in a health insurance policy are certain illnesses for which no claims will be entertained for a set period from the date of taking the policy. For example, treatment of conditions/diseases like cataract, piles etc cannot be claimed in the first 365 days of taking the policy. The reason for this is that these are treatments, which can be postponed for many days, and hence the insurance company could have individuals taking a policy just for claiming for such treatments. Such exclusions are called One-year exclusions, Two year exclusions and so on till four years.

Now- In case you were covered under the existing insurance policy for a period of one year, the waiting period of 30 days and first year exclusions will not apply in policy to be renewed. The two-year exclusions shall apply for a period of one more year. Pre-existing condition exclusion shall apply for a period of three more years. Similarly will be the case with 2 year, 3 year and 4 year exclusions, where the period already spent with the earlier insurer will be credited to you. This also includes the 30 day mandatory waiting period.

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How do I port my health insurance?

To transfer your policy from company A to company B, you will need to approach Company B (new insurer). You will be asked to fill in an application for porting. Company B will then process the application and post the request on the IRDA site within 7 days. The existing insurer (company A) will have to furnish all the required data about the insured within 7 days , again through the IRDA website. Once satisfactory data is available, Company B will underwrite your policy and you will be a customer of B and carry forward all benefits from company A.

5 things to remember before opting for porting

1. When applying for porting, be sure that your existing policy is valid for at least 45 days more. Else, the application will be rejected.

2. The portability is only applicable for the sum-insured under previous policy.

3. Portability is applicable for all individual health policies. In case you are a part of a family/group policy, you will need to migrate to an individual policy from the same insurer and then apply for portability only after 1 year.

4. Sometimes the waiting period/exclusion period for the same disease might be different for different insurers. Ensure that you are clear about all the terms and conditions before applying.

5. Do not port for saving money on premium. With the new competitive premium regime, the differences in premium of two companies will not be very high. It is not advisable to port just because the other company is offering a lesser premium. Port if you have a service problem with existing insurer. Else, remember that all said and done, you will have to build a ‘new relationship” with the new service provider (Agent, claim officers, front office staff etc). And relationships take time to mature.

You have been given the power to choose your provider. Get educated and take an informed decision. Stay healthy. Stay happy!

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