Health Insurance Portability

Here is another milestone in the general insurance industry in India. Health insurance portability which was to become applicable earlier in the year is now a reality ! So why are we excited ? Well, it gives you another opportunity to make your financial planning more better by being with the insurer who you think is the best.

You heard that right – you can now switch your health insurer without actually losing on the benefits you might have accumulated with your current one. Let’s check.

Health Insurance Portability – the Past

Before October 1st, if you needed to move to a new health insurance company, you would have to become a new customer for them and lose all the benefits that your existing health insurance policy might have accumulated.

For example, the rules dictate that you need to stick around for 1 to 3 years with an insurer before pre existing illnesses can be covered. In case of switching to a new insurer, you would have lost this benefit completely. Pre-exiting illnesses would get covered after the mandatory period is over with the new insurer. This has changed from October 1st.

The present

If say you have covered one year with your present insurance company, then you have to wait for only 2 more years with the new insurance company before pre-existing illnesses get covered, thanks to health insurance portability.

While this is a great move forward for investors, make sure you do due diligence before changing your insurer. The premium amount you pay should not be the only reason for you to move.

Keep in mind the following points when initiating your health insurance portability

Only individual and family floater policies can be transferred over.

Applicable only to health insurance policies that are issued by non-life insurance companies.

The process to move to a new insurer needs to be initiated at least 45 days before the premium renewal date of current policy.

Maximum time within which new insurer can ask for more details from you is 7 days.

Maximum time within which existing insurer provides information to new insurer is 7 days.

Maximum time for new insurer to let you know of its decision is 15 days.

The transfer

At least 45 days before your current policy’s premium has to be paid, you can initiate a transfer. The new insurance company will take 15 days to either accept or reject your request. If you do not hear from them in these 15 days, they cannot reject your transfer request. In these 15 days, the new insurer can come and ask for more information either from you or from your exiting insurer.

Remember both the sum assured and accumulated bonus can be transferred. But there is a catch when transferring a policy with bonus.

Suppose the sum assured of your policy is 2 lakhs and you were paying a premium of say Rs 2500 for it. You accumulated a bonus of Rs 25000 in the last 2 years as there were no claims that you made. So the sum assured with your current insurer is actually Rs 2.25 lakhs. When you transfer this over to a new health insurer, you might have to pay a premium for Rs 2.25 lakhs and not Rs 2 lakhs. So your premium will be more than Rs 2500. In short, while you can carry over the no claim bonus, the new premium will be calculated on the new cover.

Note that there is no guarantee that the transfer will necessarily happen for sure at the same premium and at the same sum assured.

The new insurance company has the right to reject your request. Or accept it with a bloated premium. If you have had many claims in the past, why will a new health insurance company take you on board ?

You need to fit in any of the policies of the new insurer. Not all health insurance policies are same and all of them offer something different, so make sure when you move, you read the policy wordings on your own to understand what you are signing up for. Since the new insurer will do its own underwriting, you could possibly end up with a higher premium as well.

Remember that using mediclaim or health insurance portability just because your premium is large or because your insurance company rejected your claims is not a wise idea. You need to move if the new policy is suitable for you.

This move is bound to make insurers compete with each other for delivery of better services and to retain existing clients. This could possibly lead to other advantages for investors.

Stay tuned and bask in the glory of an India that is fast moving to the “client is king ” tag-line.