Excerpt: The insurance industry of India consists of 53 insurance companies of which 24 are in life insurance business and 29 are non-life insurers, according to data provided by the Insurance Regulatory and Development Authority’s (IRDA). But how do you know which one of these companies offer the best product to you?
Imagine finding yourself in a predicament, where you had previously opted for an expensive health insurance plan, only to find certain shortcomings in the policy. As you learn more about different plans that are tailor-made for customers, you believe a different insurer would better cater to your existing needs. However, as a policyholder, you might still be hesitant to take the leap, in fear of longer waiting periods, or wasting your accumulated benefits. A bad claim experience or a sudden increase in the premium can make it incredibly difficult for a policyholder to continue with their existing insurer.
While buying a policy, we often ignore important features such as claim settlement ratio, or the number of hospitals under the insurer’s network, and only compare premiums. With the Insurance Regulatory and Development Authority’s (IRDA) guidelines on health insurance portability, policyholders can now switch to a different insurer, with better add-ons and features.
Benefits which can be ported
Introduced in 2011 by the IRDA, portability allows policyholders to transfer the credits gained for pre-existing conditions, and time-bound exclusions in the existing policy. The no-claim bonus can also be carried over while porting; however, porting of a policy can only be done between similar types of health insurance plans. This would mean that upon completing the waiting period for specific clauses with the existing insurer, policyholders can continue without the waiting periods under the new policy.
What are waiting periods?
In a health insurance policy, you usually find three kinds of waiting periods. The first type is the typical 30-day waiting period, which comes into effect immediately after purchasing the policy. Within the first 30 days after buying the policy, the insurers do not accept claims due to an ailment, and only cover the hospitalization resulting from an accident. The second kind of waiting period is the one on pre-existing conditions, which can go up to four years. The third kind is the waiting period on specified ailments. If a specific ailment is excluded from the policy for a certain period, the policyholder will not be covered if they suffer from that ailment until the exclusion period expires, even if the policyholder develops the ailment after buying the policy.
How portability works
Policyholders can opt to port their policy from one insurer to the other during the time of renewal. Generally, policyholders are encouraged to apply for portability anytime between 45-60 days before the expiration of their existing policy.
While filling the portability form, you have to provide details of your existing policy. Once the new health insurer gathers the information required, they will approach the existing insurer, to know about the coverage and claims-related details of the policyholder. Based on this information and underwriting guidelines, the new insurer can either accept, or reject the proposal. Furthermore, the new health insurer only has 15 days, within which they have to decide whether they will accept, or reject the porting of the policy. If the insurer fails to take a decision within this period, they will have no other option, but to accept the application.
Understanding portability of health insurance
One has to remember that while opting for portability, the medical underwriting happens based on the policyholder’s current health status, instead of the policyholder’s health status while purchasing the existing policy. Thus, the insurer may ask the policyholder to co-pay, or increase the premium amount, based on their current health status.
Porting of health policy generally comes with a lot of benefits, such as avoiding waiting periods. However, submitting incorrect information, or the inability to provide the previous policy documents can lead to the rejection of the application. Furthermore, people in the ‘high-risk’ category (those in the higher age group, or poor health record) might end up paying higher premiums.
You can opt to port your policy to a new insurer after a bad claim experience, or a sudden increase in the premium amount. Policyholders should also carefully read the fine print, before deciding to switch to a new insurer.
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The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
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