Portability of health insurance in India

We’ve all heard of mobile number portability (that it’s constantly being delayed is another matter!). Similarly, the Insurance Regulatory and Development Authority (IRDA) is now working with an aggressive timeline for health insurance portability in India. On a simplistic level, health insurance portability means that the policyholder can transfer the health insurance policy from one insurance company to another upon renewal, without losing any accrued benefits.

The basic idea is to allow the policyholder to continue with a minimum basic cover that is the same for all insurance companies. Today, if you contract an illness during the earlier term of the policy, it will be treated by the new insurer as a pre-existing illness, which is why people (especially seniors) find it very difficult to switch insurance companies, even though they may be dissatisfied .

This is a blessing for policyholders in India. What it does is it ensures that the Indian insurance company you are currently insured with cannot afford to take you for granted (no matter what the customer service would have you believe, you are nothing but a revenue stream for the insurance company !). It also makes the insurance company think twice before frivolously denying claims. The biggest advantage is that the policyholder is not tied to one insurance company and has an option if his existing insurance company no longer wants to cover his risk. This will also ensure that insurance companies introduce more cost-competitive and customer-friendly schemes, so that there is no switching by their existing policyholders, leading to a reduction in premiums.

Currently, most health insurance contracts are one-year contracts, and if there is no claim, bonuses in the form of a higher insured amount for the same premium, or a reduction in the premium, are insured. However, if the policyholder wishes to transfer it to another company, the bonuses will not be transferred and the policyholder will pay the base rate. For seniors who purchased the original policy many years earlier, it becomes even more difficult to switch as the insurance companies are reluctant to sell new policies to the elderly.

Some of the key issues such as data sharing, bonus transfer and two different policies are elaborated. According to senior officials, the base product has already been developed by GIC and is now awaiting approval from IRDA. Health insurance portability in India will most likely be available for sums insured up to Rs 1 lakh or 2 lakh (we recommend 2 lakhs). Since two health insurance plans are almost never identical, GIC works towards a common minimum benefit that can be transferred if one decides to switch insurance companies.

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Accrued bonuses on no-claims policies are non-transferable and extended cover is treated as a new policy. There are no exclusions from the basic cover based on reflection periods or pre-existing illnesses. While health insurance portability may take away customization from health insurance plans, it’s a small price to pay for the freedom of knowing that the health insurance company can’t twist your arm when you’re at your weakest. Health insurance portability will also allow online comparison through sites like www.PolicyTiger.com to play an even greater role in the decision-making process.