A plus on current rules, but there will be restrictions - and downsides.
Insurance companies and the sector regulator have been holding talks on allowing portability in medical insurance. The thinking is that someone with a medical insurance cover of over Rs 1 lakh should be allowed to shift insurers without losing the cover.
Said S L Mohan of General Insurance Council (GIC), an association of non-life insurers: “We have proposed that the insured should have the option to switch insurers without forgoing any benefits.”
| HEALTH FOR ALL |
PLUSES
MINUSES |
- Accumulated bonus on claim-free policy will not be carried forward
- Switchover can take place only between similar policies
- Extended cover will be treated like a new policy
Today, there are many deterrents to shifting. If you move from one company to another, you have to start afresh. You are treated as a new customer and charged a premium that could be higher (on the basis of your current age).
And, if you acquired a disease during your earlier policy term, it is treated as a pre-existing one. Also, you have to complete the stipulated time period after which the policy comes to force for certain ailments. For example, most policies pay for certain treatments only after completing six-nine months.
Portability may not change everything. “The idea is to allow the policyholder to continue with a minimum base cover that is similar for all insurance companies,” said K N Bhandari, a former GIC official.
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Base Carryover
The Insurance Regulatory Development Authority and insurance companies are in the consultation stage to form a ‘minimum benefit plan’, a combination of base cover and facilities, that can be carried forward. “A standard portable health insurance policy may be introduced for easy switchover and continuity,” said Rahul Agrawal of Optima Insurance Brokers. Insurers will be able to sell such covers once the regulator’s approval comes.
However, experts said if you wanted anything over and above the base cover, it would be treated as a fresh policy. For instance, say you have been insured for Rs 5 lakh with company A for five years. If you want to shift to insurer B, you will be eligible to shift only for the base cover of, say, Rs 1-2 lakh. If you wish to increase the base cover to Rs 5 lakh, you will be charged according to the norms of the new policy.
And, other things, such as premium according to your current age and the waiting period, will apply according to the new policy. However, on the base cover, you will be able to make claims instantly and no exclusions (by way of diseases and time cap) will apply.
Portability may be especially beneficial for senior citizens, who find it difficult to shift if they are unhappy with their present insurer, as other companies are reluctant to sell them new policies.
Some forgoes, too
There are some negatives, too. In an existing policy, a policyholder can accumulate a no-claims bonus. This can come in the form of increased cover for every claim-free year. Under portability, however, you would not be able to carry forward the accumulated bonus, said Mohan.
Another element missing will be customisation. That is, if you have a customised insurance policy (along with your specific riders), shifting will not allow you to continue with these. Shreeraj Deshpande, head, health insurance, Future Generali General Insurance, said: “You may not be able to shift from a benefit product to an indemnity product or vice versa. But there are many similar products among which you can shift.”