Should you port your health policy?

Those of you with health insurance policies that are over 10 year old may be fed up with caps on room rents and limited coverage.

However, you have some hope. You can port your policy to another insurance company, that is shift your policy, without losing out on the continuity benefits. But the process is not easy, which explains why porting of health insurance has not picked up, though it has been permitted since 2011. Let us see why policy holders port their policies and how to go about it.

"Porting has empowered the consumer to switch insurers without losing the benefit of waiting period served with the existing insurer for pre-existing diseases. A customer must understand that the new insurer will also underwrite the proposal and accept the life at the underwriting terms of the new insurer,'' said Mayank Bathwal, CEO, Aditya Birla Health Insurance.

"Health insurance portability has changed the dynamics of medical insurance and has enabled customers to choose a plan more holistically and move to a provider that offers the best product, be it in terms of product features and coverage. Since insurers are also designing insurance products that are more health and wellness focused, customers now have more choices to explore, said Ashish Mehrotra, MD & CEO, Max Bupa Health Insurance.

Common reasons for porting

Room-rent capping, expensive policies and perpetual delays in claim reimbursement are some reasons that can trigger porting of policy, said Sapna Desai, chief marketing officer at Cigna TTK Health Insurance Company.

"An individual can also be lured due to low premiums, but one should be careful as it is usually coupled with reduced coverage. In general, a policy holder ports from one plan to another offering better range of features,'' she said.

Being dissatisfied with the existing product and services, specially claims and grievance not addressed and a better proposition in terms of product being offered by another insurer are also reasons for porting.

"Today, a lot of metro and semi-urban customers are shifting from public sector insurers, because many of the 10-year-old policies have a 1% clause of room rent. Today, several insurers offer, for slightly higher premium, the facility of single private room or no room rent cap. Besides, a lot of customers who can afford it would rather be covered under better policies before they become ineligible due to age. Especially given the healthcare cost in metros today. That is also a big section moving towards private insurance,'' said Vaidyanathan Ramani, head, product, and innovation, Policybazaar.com.

Expressing a similar view, Desai of Cigna TTK said, "Based on the enforced policies, value-wise about 10% is the contribution from port-in cases. Currently, we are seeing porting mostly in metro cities, and not so much in the Tier II cities and towns.''

Another common reason for shifting is when people move from individual policies to family floaters. For instance, a married couple who had purchased separate individual policies may choose to move to a family floater to save on premium. "A floater gives at least 40% deduction in premium,'' Ramani said.

Process of porting

As per regulation, customers must apply for the porting request to the new insurer at least 45 days prior to the renewal due date. The new insurer, post evaluating the application, may either accept the application on an asis basis or may issue a counter offer. Basis the underwriting evaluation, there could be further risk loading, which means premium could rise if the insurer feels the policy is risky. A policy on the revised terms shall be issued by the new insurer.

Evaluation may include medical underwriting, which means the policyholder may have to undergo a medical test. If you are suffering from chronic ailments like hypertension or diabetes or are on the verge of making a serious claim, your porting request could be rejected.

Customers can port the accumulated No Claim Bonus (NCB) in the existing policy, as Sum Insured (SI) to the new insurer's policy and shall be eligible for portability benefits on the same as well, said Bathwal.

Since your original base SI plus NCB, now becomes your new base SI, your premium may increase, as the base SI amount is higher, pointed out Ramani.

If your application for porting is rejected, you have 30 days after the expiry of your existing policy to renew it, beyond which you may be left without any policy and lose all continuity benefits.

"Ideally, you should do your research three months before your policy expires since the total time you have is 75 days for porting your policy,'' Ramani said.

Improper documentation is one reason for porting requests getting rejected. If you are porting in the fourth renewal year, the new insurer will validate that you have spent four years with your previous insurer, and will ask for the old policy documents. Since these are not publicly available, the policyholder can ask the old insurer to provide the documents. But if the company takes time, then one may miss the deadline.

Conditions to keep in mind while porting

Ideally you should not attempt porting if you have had a bad claim, because the very fact that you have had a claim makes you unattractive for the new insurer. But it depends on the ailment. If the claim has no linkage to your future health situation, you could sail through the porting. But if the claim was for something long-term, then you are not attractive for the new insurer.

One should also be clear about waiting periods. For instance, your existing policy may have a two-year waiting period for certain ailments and you could be porting to a policy which has a three-year waiting period for the same ailment. While the new insurer will give you continuity benefit, you will be treated as if you were with the policy from the beginning. This means that it will be considered that you have finished two out of the three-years and have one more year to go, Ramani said.

Customers should also be aware of exclusions. For instance, some companies offer coverage for bariatric surgery. But if you port to another company that does not offer it, then you will not get it.

"Be careful about what you are gaining and what you are losing in terms of exclusions and waiting periods. Continuity means that the new insurer will transfer the duration with the previous insurer to the new product. But it will be applied as per new product guidelines,'' Ramani pointed out.

As per regulations, the same insurer cannot refuse coverage if porting out of group to individual. But another company could refuse because a group customer is perceived as riskier.

So, those who are covered under group health insurance and wish to migrate from their group policy to an individual policy can do so by first shifting with the same insurer and subsequently to another insurer, said Desai.

MOVE SEAMLESSLY

All health insurance policies, including floater policies are portable. However, it must be noted that only similar health policies can be ported. 

PORTING DEADLINES

• 45 
  Days before the expiry of your existing policy, when you must apply for porting
   
• 40% 
  Average discount that floater plan offers v/s an individual plan having similar features
   
• 30 
  Days after expiry of existing policy by when the insurer is bound to restore your existing policy