There has been a rise in health insurance policy portability in recent times, and it can be attributed to a variety of factors, including the hikes in premiums. Many policyholders are looking for more affordable options, especially if they face steep increase in premium in their current plans. Insurers offering premium discounts attract customers seeking more affordable options. Moreover, when their current policy lacks the desired coverage or flexibility in the sum insured policyholders might consider porting to a new insurer that better aligns with their needs.
The Insurance Regulatory and Development Authority of India (Irdai) allows policyholders to port a health insurance policy from one insurer to another, provided the application is made at least 45 days before the policy renewal date. After the request is made, a new insurer reviews your application and, based on disclosures made, suggests a premium rate. Importantly, your continuity benefits are not lost during this porting process.
However, when porting your health insurance policy, it’s crucial to be upfront about disclosing your existing illnesses, including any illness contracted after buying the old policy. Failure to disclose information can lead to the rejection of your health insurance claim. Chirag Nihalani, General Manager of Insurance Samadhan, emphasises, “If one fails to disclose existing illnesses or any material information, such as pre-existing diseases and previous hospitalisations when porting a health insurance policy, it can lead to grave repercussions. This non-disclosure can significantly impact the policyholder in several ways.”
Nihalani further explains how non-disclosure of health conditions can lead to future problems. First, the new insurer, on discovering undisclosed health conditions, may reject any claims related to those conditions. This is because the premium and coverage were calculated without considering the undisclosed conditions. Second, in more severe cases, the new insurer might cancel the policy altogether. This decision can be based on the insurer’s judgment that the failure to disclose critical health information constituted a breach of the contract, leaving the policyholder without any insurance coverage.
Another potential consequence is the loss of continuity benefits. When a health insurance policy is ported, the insured usually retains certain benefits accumulated over time with the previous insurer, such as completion of waiting periods for specific conditions. However, if the policy is cancelled due to non-disclosure, the continuity benefits can be lost. This means if the individual seeks a new policy, they might have to undergo all waiting periods afresh, which could delay coverage for existing conditions.
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Additionally, having a policy cancelled due to non-disclosure can impact the individual’s ability to procure health insurance in the future. The history may be viewed unfavourably, prompting other insurers to increase policy premiums. Given these potential outcomes, policyholders must be transparent and disclose all relevant health information when porting a policy. This ensures the validity of the policy, the legitimacy of future claims, and continuity in insurance coverage.
Although a policyholder might be porting due to reasons like premium discounts or better sum insured options, ensure that the coverage they are getting with the new policy aligns with their healthcare needs. Sometimes, lower premiums may come with reduced coverage or a longer waiting period.
Importantly, if the insured has been diagnosed with an illness requiring ongoing treatment, it would be prudent to stay with the current insurer. Porting in such situations could lead to complications such as higher premiums or even denial of coverage for that condition by the new insurer.