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In health insurance, waiting period is the time after which claims related to pre-existing conditions cannot be rejected  (Photo: iStock)
In health insurance, waiting period is the time after which claims related to pre-existing conditions cannot be rejected (Photo: iStock)

Porting your insurance may be beneficial, but make sure you do it right

Close your previous policy only after the porting request is accepted by the new insurer

Last month, two friends called to discuss issues in porting their insurances. In both cases the facts were similar—they had long-standing health insurance policies from a public sector insurer. All waiting periods had been completed, which meant that even claims pertaining to pre-existing conditions would be paid for. Both friends had ported their health policies to a private sector insurer. However, they were in for a surprise when they filed claims in the newly ported policies. The claims were rejected for non-disclosure of previous ailments. Ideally, this should not have happened because they had already run through the waiting periods of their previous policies.

In health insurance, waiting period is the time after which claims related to pre-existing conditions cannot be rejected. It is a maximum of four years but two-three years is becoming the norm. Additionally, the insurance regulator has recently introduced the concept of an eight-year look-back. This means that after eight years, a claim cannot be rejected, except for proven fraud. These features imply that the more you renew your health insurance, the higher the certainty that a claim will be paid. This may have been a disincentive for persons to buy new health products had it not been for the facility of porting. Porting allows you to switch your health insurance to a new product, provided by any insurer. Porting can be done to another product with the same insurer or to a new insurer. In both cases, the insurer being switched to gives credit for the time spent in the previous health insurance by reducing the waiting period in the new product purchased. For example, in the two cases that I described, the new insurer had waived off the waiting periods completely because the previous policies had already run for over five years.

Porting to newer and better insurance is helpful because products are rapidly improving. What you bought a decade ago will most likely be overpriced and outdated. However, do know that porting is only an adjustment of waiting periods. You will be bound by the benefits, exclusions, premiums and contracts of the new health insurance that you buy. Also, insurers are not obliged to accept a porting request. They are entitled to set their own underwriting norms and reject a porting request if they wish to. Practically, many insurers encourage portability by waiving the requirement for additional medical tests or the need to complete detailed forms. They always ask for a declaration of good health, existence of pre-existing conditions and claims history. An adverse report will result in your porting request being rejected. This makes it important to fully disclose your medical history, even when porting. Porting is not a way to hide medical problems and claim a larger insurance benefit.

The regulator has an in-built safeguard to reduce porting-related misselling—intermediaries, agents and brokers do not earn a commission on ported policies. This prevents situations where an intermediary will switch your insurance for its own financial gain. The flip side is that intermediaries may not advise you to port an insurance even if better alternatives are available.

If an insurer rejects your porting request, you can still buy a top-up health cover that enhances and adds another layer of insurance over your base plan. These top-ups pay a benefit above a threshold and this makes them more cost-effective than buying regular mediclaim.

Porting also works in motor insurance. However, here it is the no-claim-bonus (NCB) that is ported. This NCB can reach 50% of the premium and is a sizeable amount. Porting motor insurance allows you to retain the premium discount even if you switch insurers for a particular car or buy a new vehicle. You will lose the NCB if your insurance is not renewed on time or if you make a claim.

As I dug deeper into the rejected claims of my friends, one claim was rejected because she did not disclose a pre-existing condition, incorrectly assuming that this was not required during porting. For the other friend, the case is curiouser. He was not explicitly asked for a declaration of good health or medical history at all, yet the insurer expected this information. A failed health insurance porting is disastrous for policyholders because it leaves you uninsured. The previous insurance would have lapsed without a new cover being in place. The single most important consideration, then, while porting, is to apply for a port at least a month before renewal, declare your health conditions accurately and close your previous insurance only after the porting request is accepted by the new insurer.

Kapil Mehta is co-founder, www.securenow.in

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