DYK: How easy is health insurance portability2 min read . Updated: 09 Jul 2014, 06:20 PM IST
Insurers are not mandated to accept portability requests. The decision is left to their discretion
If you are unhappy with your health insurance policy, you can port your policy to a new insurer. The Insurance Regulatory and Development Authority (Irda) announced portability in 2011, allowing you to switch between insurers and carry forward the benefits of your old insurance. A claim is generally the litmus test of a health insurance policy and it’s mostly the claims experience that would nudge a policyholder to change her insurer. A bad experience means you would want to port your policy right away. But is portability easy? Not really. Let’s begin by understanding health insurance portability and then how easy or difficult it is to port a policy.
What is portability?
A health insurance policy comes with three kinds of waiting periods. The first applies when you buy the policy for the first time. Usually, insurers wait for the first 30 days before they cover hospitalization expenses on account of an ailment. Hospitalization due to an accident is usually admissible. The second waiting period pertains to certain specified ailments. For instance, hernia is a common ailment and is excluded in the first two years of the policy. The third and the most important waiting period is on pre-existing diseases. Pre-existing diseases are those ailments that are present at the time of buying a health insurance policy and insurers wait for up to four years before agreeing to insure these.
So, when you move from one policy to another, you can port these waiting periods. Say, you have a pre-existing ailment and you have already waited for two years in the current policy. If you port to another policy that comes with a waiting period of three years, you will have to wait only for a year more to be eligible to make a claim on the pre-existing ailment.
Do keep in mind that only waiting periods are portable and not the features. So, if the new policy has sub-limits on room rent while the older policy didn’t, you will have to settle for the sub-limits. Apart from this, you will need to accept the pricing of the new insurer.
Is it easy to port?
Insurers are not mandated to accept portability requests. The decision is left to their discretion. Therefore, while in theory portability is possible even when you have a pre-existing ailment or have made a claim on your existing policy, in practice it’s not so easy. An insurance broker we spoke to told us that in practice insurers don’t encourage porting if the policyholder has a pre-existing ailment or has made a claim on account of an ailment. This is because an ailment increases the probability of hospitalisation, thereby increasing the risk for the new insurer. This is also the reason why porting becomes difficult for senior citizens as well. Generally, porting a policy is easy for a young and healthy individual. Another reason to buy a good health insurance policy and to buy it while young.