Advantages and Disadvantages of Health Insurance Portability – When and How to Transfer

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A health insurance policy has become a mandatory part of financial planning amid the rising sickness curve and rising medical inflation. More than two dozen companies in India offer a variety of health insurance plans that protect the individual against unforeseen events such as medical emergencies. However, it is advisable not to just blindly renew the policy periodically, but to evaluate the benefits and features available. If a customer is not satisfied with the benefits, the premium or the quality of the service of the insurer, he can consider transferring the health insurance policy.

What is the portability of the health insurance contract?

In 2011, the Insurance Regulatory and Development Authority (IRDA) introduced health insurance portability, which allows an insured to switch to another insurer to obtain better services without losing the credit obtained through the conditions pre-existing conditions and time-limited exclusions. Portability is limited to products with similar risk coverage.

By accepting the application, the new insurer will grant the insured the credit for the elimination period for pre-existing conditions that the individual acquired from the old insurer. The features of the existing policy cannot be transferred to the new insurer — only the sum insured (including the bonus-malus) can be transferred.

An individual can transfer if the insurance provider does not provide the promised quality of service. If the existing insurance provider does not offer sufficient coverage against specific health conditions, the policyholder may consider transferring to another service provider. Another factor that can lead to transfer is the insurer’s slow settlement of claims. A policyholder can also opt for health insurance portability if another service provider offers better service for the premium they pay for the existing policy.

A policyholder can change the policy upon transfer to suit their current health needs.

Some of the other benefits are:

  • The existing sum insured and no-claims premium are added to the premium accrued during portability to give the new sum insured.
  • The benefits of the old policy continue in the new.
  • The policyholder can benefit from the existing advantages at lower premium prices.
  • Policyholders can benefit from better service and attention.
  • Portability allows the policyholder to choose a provider with better claims settlements.
  • An insured can also transfer to a new service provider to avoid hidden terms and conditions.
  • Some of the disadvantages of porting are:

  • Policyholders can only opt for portage when their policy is due for renewal and not at any time.
  • They can only relate to similar types of strategy.
  • Sometimes policyholders have to pay a higher premium for additional benefits that wipe out any monetary benefit from the transfer.
  • The policyholder must inform the existing insurer of his portage intentions at least 45 days before the expiry of the current policy. He must also specify the insurance company to which he wishes to transfer the policy.

    The policyholder will need to complete the portability form and provide details of the existing insurance such as the name and age of the insured.

    They will also need to complete the proposal form with the full details of the new insurer and submit the essential documents with it.

    Within 15 days, the insurer will inform the policyholder whether the proposal is accepted or rejected.

    In case of refusal, the insured can contact another insurer to renew the existing policy. If the new insurer is unable to inform the policyholder in time, it will have to accept the request.

    (Edited by : Shoma Bhattacharjee)

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