Get the most out of health cover portability
Last year, several customers of a private general insurer were up in arms against its decision to increase health premiums. They went to town crying themselves hoarse over the disproportionate hike, but many could not switch to another insurer. This was because they would have had to forgo critical continuity benefits. However, cases like these could become a thing of past once health insurance portability becomes a reality from July 1, provided it is implemented by insurers in its true spirit.
More power to policyholders
The key issue that prevents policyholders from insurer-hopping at will lies in the pre-existing disease (PED) cover offered by health insurers. In most cases, claims arising out of such pre-existing illnesses are reimbursed only after a waiting period of 3-4 years. A pre-existing disease is defined as any ailment or condition that the policyholder was suffering from, within 48 months prior to buying the policy. And, the period during which the insurer will exclude coverage to such illnesses typically around 3-4 years is referred to as the waiting period. So far, policyholders who switched loyalties to another company were treated by it as new customers, thus requiring them to go through the waiting period all over again. Suppose, you want to shift to another insurer after three years of paying premiums under a policy with a waiting period of four years.
Now, if the new policy too prescribes a four-year-waiting period, you would be at a considerable disadvantage. This is because, instead of waiting for just one more year for the pre-existing illness coverage, you would be forced to bide your time for another four years. With portability coming through, the odds are now stacked in your favour as you can carry forward the PED cover credit. Under the changed circumstances, the waiting period in the new policy would be reduced to merely one year i! n the ab ove example. There are some limitations though. Irda has directed that the credit in terms of waiting period will be restricted to the sum insured (including bonus) under the existing policy. Explains Ajay Bimbhet, MD, Royal Sundaram: Say a policyholder has an existing policy with a sum insured of `2 lakh with an accumulated bonus of `40,000 and now, he wishes to go in for a higher sum insured, say `4 lakh. Here, the credit for the waiting period shall be only in respect of `2.4 lakh (existing sum insured & bonus) and not for `4.4 lakh (new sum insured & bonus).
Making the switch
No specific procedure as such has been laid out by Irda. The policyholder will have to go through the usual process of applying to the new insurance company. The forms are likely to have a section to capture information regarding previous continuously renewed policies to enable portability, explains Mahavir Chopra, head, personal lines and e-business with insurance broking firm medimanage.com. Details on previous coverage would also be noted. Customers may have to attach proof regarding previous continuous coverage. The insurer will have to acknowledge the receipt of your application for portability within three working days. Likewise, the companies have to communicate their decision within 15 days. If the policy lapses due to delay in processing the switching request, this insurer will have to accept it.
Impact on the sum insured...
According to Irda, those wishing to switch will be assured of health cover equal to at least the sum insured in the previous policy. But, this may not always be the case. There is no obligation on the part of the new insurer to match the sum insured if it has not filed such a product with Irda. If your current cover is `5 lakh and your proposed new insurer has filed a product with Irda with maximum sum insured of `3 lakh, you cannot f! orce the new insurer to offer a `5-lakh-cover, says Subramanyam B, V-P & head, health vertical, Bharti-AXA General. The new insurer will offer portability in the closest product available, adds Sanjay Datta, head, health insurance, ICICI Lombard.
More power to policyholders
The key issue that prevents policyholders from insurer-hopping at will lies in the pre-existing disease (PED) cover offered by health insurers. In most cases, claims arising out of such pre-existing illnesses are reimbursed only after a waiting period of 3-4 years. A pre-existing disease is defined as any ailment or condition that the policyholder was suffering from, within 48 months prior to buying the policy. And, the period during which the insurer will exclude coverage to such illnesses typically around 3-4 years is referred to as the waiting period. So far, policyholders who switched loyalties to another company were treated by it as new customers, thus requiring them to go through the waiting period all over again. Suppose, you want to shift to another insurer after three years of paying premiums under a policy with a waiting period of four years.
Now, if the new policy too prescribes a four-year-waiting period, you would be at a considerable disadvantage. This is because, instead of waiting for just one more year for the pre-existing illness coverage, you would be forced to bide your time for another four years. With portability coming through, the odds are now stacked in your favour as you can carry forward the PED cover credit. Under the changed circumstances, the waiting period in the new policy would be reduced to merely one year i! n the ab ove example. There are some limitations though. Irda has directed that the credit in terms of waiting period will be restricted to the sum insured (including bonus) under the existing policy. Explains Ajay Bimbhet, MD, Royal Sundaram: Say a policyholder has an existing policy with a sum insured of `2 lakh with an accumulated bonus of `40,000 and now, he wishes to go in for a higher sum insured, say `4 lakh. Here, the credit for the waiting period shall be only in respect of `2.4 lakh (existing sum insured & bonus) and not for `4.4 lakh (new sum insured & bonus).
Making the switch
No specific procedure as such has been laid out by Irda. The policyholder will have to go through the usual process of applying to the new insurance company. The forms are likely to have a section to capture information regarding previous continuously renewed policies to enable portability, explains Mahavir Chopra, head, personal lines and e-business with insurance broking firm medimanage.com. Details on previous coverage would also be noted. Customers may have to attach proof regarding previous continuous coverage. The insurer will have to acknowledge the receipt of your application for portability within three working days. Likewise, the companies have to communicate their decision within 15 days. If the policy lapses due to delay in processing the switching request, this insurer will have to accept it.
Impact on the sum insured...
According to Irda, those wishing to switch will be assured of health cover equal to at least the sum insured in the previous policy. But, this may not always be the case. There is no obligation on the part of the new insurer to match the sum insured if it has not filed such a product with Irda. If your current cover is `5 lakh and your proposed new insurer has filed a product with Irda with maximum sum insured of `3 lakh, you cannot f! orce the new insurer to offer a `5-lakh-cover, says Subramanyam B, V-P & head, health vertical, Bharti-AXA General. The new insurer will offer portability in the closest product available, adds Sanjay Datta, head, health insurance, ICICI Lombard.
Comments