Two years back, 41-year-old Ashish Shah, sales manager at Himgiri Cooling Towers, had the satisfaction of buying the cheapest health insurance policy in the market. On the recommendation of a colleague, he bought a floater policy from Reliance General Insurance Co. Ltd, HealthWise Silver, for a cover of Rs5 lakh. His premium was around Rs5,000 for a family of four. Had he bought a similar policy from another insurer, he would have had to shell out at least double the amount.
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Little did he know then that a prudent financial decision would turn out to be a big mistake. He was in for a huge shock when renewing his policy; the premium had shot up to Rs26,500. Says Shah: “I have never made a claim and they have hiked my premium by at least five times. What was affordable till now has suddenly become unaffordable. I have a family policy from New India Assurance for a sum insured of Rs4 lakh and I pay Rs8,000. The premiums have never increased by this much.”
Sadly enough, he is not the only policyholder who is facing this problem. At least 300,000 policyholders are wondering how to tackle the sudden increase.
Reliance General, which has saw the steepest hike in its premiums last year, is offering continuity benefits to its policyholders by offering them to downgrade their policies. The HealthWise policy comes in three variants: Standard, Silver and Gold. While Gold is the most expensive policy, Reliance’s Standard policy is a basic health cover. Shah has been offered to take up the standard variant for a premium of Rs17,000.
What to do
But as a customer if you feel that trust has been violated and you want to move, here’s what you can do. If you have suffered an increase in premium that is more than 20-30% and your policy is up for renewal, move to another company that will offer a cheaper plan. Says Subrahmanyam B., vice-president and head (health vertical), Bharti AXA General Insurance Co. Ltd: “You needn’t wait for renewals to switch to another insurer. You can make the switch mid-way and your insurer may even give you a refund. However, if you have made a claim during the year, then you don’t get a refund.”
The good news is that you are not entirely dependent on health insurance portability to shift your insurer. Here is how you can make that painless shift.
Delays are common in the health insurance industry, so switch to another insurer at least a month before your policy terminates.
How to shift
If you don’t have a pre-existing disease: If you haven’t made a claim on your current health cover on account of an ailment and if you don’t have a pre-existing disease, then you have an advantage. You can switch your policy from one insurer to another and get some portability benefits (see graph).
While waiver of waiting period on pre-existing diseases to the extent you’ve already served in the earlier policy and the carrying forward of no-claim bonus are two benefits currently difficult to port, insurers normally agree to port other benefits. Says Deepak Mendiratta, director, Health and Insurance Integrated: “Typically, if you approach an insurance company, they agree to port benefits such as the initial waiting period of 30 days and one-two years waiting period on specified diseases. But while buying a policy from a new insurer you may have to undergo medical tests.” Also, you will have to produce proof of continuity, which means a copy of your health cover.
You could consider insurers such as Apollo Munich Health Insurance Co. Ltd, which is ahead of industry standards since it offers partial portability across all policies. Not only can you port the initial 30-day waiting period that you’ve already served, but can also get the first two years on specified illnesses waived off. The biggest advantage you get is that the insurer also ports up to 20% of your no-claim bonus and the waiting period on pre-existing diseases after one year.
If you have pre-existing diseases: In this case, you are at a disadvantage and your bargaining capacity is limited. While with Apollo Munich you could get lucky if you haven’t made a claim on account of your pre-existing ailment, other insurers may ask you to wait all over again before they agree to cover your pre-existing ailments.
Also if you have made a claim on your health insurance policy for an ailment, the new insurer will treat that ailment as a pre-existing disease and you will have to wait for up to a maximum of four years to get that ailment covered again. If you had renewed your policy with the same insurer, you would have got continuity benefits. In other words you wouldn’t have to wait to make any subsequent claims on your policy for your pre-existing ailment.
While portability is still some months away, you still have small windows of opportunity to make use of.
Graphics by Yogesh Kumar/Mint