What is Portability in health insurance?

By Vamsee Krishna Dr in Health Insurance in India

Jun 24

Health insurance Portability makes it possible for a policyholder to transfer the credits(benefits) gained for pre-existing conditions and time-bound exclusions when switching from one plan to another of the same insurer, or from one insurer to another. When you change your health insurance policy from one insurance company to another, you don’t have to lose the benefits you have accumulated.

Before in health insurance policies, moving from insurer to other resulted in losing benefits like the waiting period for covering Pre-existing Diseases. This means that they have to wait for the particular time period to get coverage if you have any pre-existing diseases. Now IRDA protects you by giving you the right to port your policy to any other insurer of your choice. It has laid down that your new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”.
This applies not only when you move from one insurer to another but also from one plan to another with the same insurer.

The insured (customer) will also be entitled to all continuity benefits, like a “no claims bonus”(the bonus which the customers get if they didn’t have claims in that period) and free medical check-ups, which were accumulated during the previous policy. The IRDA guidelines allow a switch from a group mediclaim to individual or family floater policies and allow the policyholder to retain the waiting period credit.

Since many families depend solely on their employers’ group policies, such transfers will help them buy policies on their own without having to wait for four years before pre-existing diseases are covered.

Every policyholder has the right to portability provided the previous policy was maintained without any irregularities. In order to avail this facility, the policyholder has to apply to the insurance company, where he wishes to port his policy, at least 45 days before the premium renewal date of the existing policy. The existing insurer must furnish the details within seven working days through a common data sharing portal developed by IRDA. Once the new insurer obtains all the details, it will have to take a decision about underwriting the policy within 15 days. If it fails to do so, it will be bound to accept the application. If an insurance company does not respond within the specified time, it will be assumed that the proposal has been accepted. This clause will make the portability process very quick and efficient.

While the IRDA has empowered all policyholders with the right of portability, it has also given insurers the right to reject any port-in requests. All requests for portability are treated as new and are subject to scrutiny by the underwriter. The insurer can reject the proposal if it seems unfavorable. In that case, the policyholder will have no other option but to continue with the existing insurance provider. Here the policyholder should be cautious while opting for portability because here the catch is that portability is not a matter of right. It is up to the new company to accept or reject a proposal because no insurance company wants to take on the liability of a troubled policy.

Many feel that insurance companies will outrightly reject the proposals of senior citizens, who are seen as a high-risk category, thus defeating the purpose of portability. Besides for those policyholders who have accumulated no claim bonus as it is transferrable could turn out to be a loss-making proposition for them because as per the IRDA the no-claim bonus can be carried forward to the new policy, but the premium charged will be for the enhanced sum assured. This means that the policyholder will have to pay a higher premium if he wants the same insurance coverage under the new policy.

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