Advantages & Disadvantages of Health Insurance Portability

Understanding Health Insurance Portability

Health insurance portability allows policyholders to change their current health insurance policy to another insurer without losing accrued benefits, like no claim bonus and served waiting periods. It provides an option to upgrade your policy or insurer in case you are unhappy with the coverage, premiums or services charged by the insurer. Basically, you can retain accumulated benefits from your current health insurance policy while enjoying lower premiums or better services from another insurer.

The Insurance Regulatory & Development Authority of India (IRDAI) has laid several health insurance portability rules for insurance companies and policyholders to ensure fair and smooth functioning. Besides, the portability facility is available for free but only possible during renewals.

What are the Pros and Cons of Health Insurance Portability in India?

Being aware of health insurance portability rules is just one part of the process. However, understanding the advantages and disadvantages of porting a mediclaim policy from the old insurer to the new will help you make an informed decision.

Advantages of Health Insurance Portability:

1. Continued Waiting Period - You can enjoy continued waiting period benefits when porting your medical insurance from the old insurer to the other. This means the waiting period served in your previous policy will be carried forward to your new policy. For example, if your current medical plan has a pre-existing diseases (PED) waiting period of 4 years and the new insurer has a waiting period of 3 years, you can get PED coverage from day 1 if you port your policy after 3 years.
2. No Claim Bonus (NCB) Retention - Health insurance portability retains your existing no claim bonus. Although you are switching your mediclaim policy from the old insurer to the new one, your no claim bonus will be transferred to the new policy without any changes.
3. Lower Premiums – With portability, you can switch to a new policy offering the same coverage as your existing policy for a lower premium. This is helpful for senior citizens and people witnessing a hiked premium after a claim.
4. Better Services – You can move to a new insurer if you are not satisfied with the services offered by your current insurer. For instance, if your existing insurer has a complicated claim process and takes a long time to settle claims, you can switch to an insurer with an easy and fast claim settlement process.
5. Better Coverage Options – You can easily find a health plan with broader coverage at an affordable premium by porting your health insurance policy in India. It is beneficial if your health requirements have changed or your family has grown.

Disadvantages of Health Insurance Portability:

1. Renewal Only - Porting your medical insurance policy is possible only at the time of renewal. You cannot port your policy in the middle of the policy year.
2. Possible Only Among Similar Plans – You can only port to a similar type of health insurance plan. For example, you cannot change your family health insurance policy to a critical illness insurance policy.
3. Hiked Premiums - If you decide to switch to a medical insurance plan offering in-built coverage as an add-on, you will have to pay a higher premium price. For instance, if the new policy offers the maternity insurance benefit as an add-on cover, your premiums will increase even though it was an in-built cover in your previous policy.
4. Loss of benefits – You may lose certain policy benefits if you choose to port from a group policy to an individual health policy.

Important Things to Remember While Porting Health Insurance

Here are some important things to remember while porting your health insurance policy:

• You can raise a portability request with a new insurance company not more than 45 days before your current policy's renewal date.
• Go through the policy coverage and benefits carefully before porting to clearly understand the inclusions, exclusions, waiting periods, etc.
• Check the policy terms and conditions carefully to find any sub-limit or co-payments applicable to the new policy. Doing so will ensure that the sub-limits and co-payments do not come as a surprise at the time of claim.
• Do check the Claim Settlement Ratio (CSR) and Incurred Claim Ratio (ICR) of the new insurer before you file a porting request.
• The reasons for rejecting your portability request and the underwriting norms may vary from one insurance company to another.

To Conclude

Portability is one of the best facilities available in the health insurance industry. It empowers policyholders to change their insurer if they are unhappy instead of suffering. It also encourages insurance companies to work harder to offer better products and services to retain customers. If you are considering porting your policy, make sure to read the pros and cons of health insurance portability before making a decision.