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Insurance

Managing pre-existing conditions with insurance portability (6 Key Questions)

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Managing pre-existing conditions with insurance portability (6 Key Questions)

The IRDA of India allows policyholders to port from one insurance company to another. This is a boon considering the rising costs of insurance premiums. A policyholder can now seamlessly port from one insurance company to another with minimum hassle. The IRDA implemented the portability feature in 2011, citing a need for such an option in the Indian insurance industry.

Porting your insurance policy is one thing, but managing pre-existing conditions along with portability is another. Let us now have a look at how a policyholder can manage pre-existing conditions with insurance portability. Let us address some of the most important questions pertaining to insurance portability and pre-existing conditions.

1.) What is insurance portability, and how does it work?

Insurance portability gives the option for existing policyholders to switch from their existing insurance company to another insurance company. This option was introduced by the IRDA of India in 2011. Insurance portability is available in health insurance, life insurance, motor insurance, and certain other insurance products. Get a detailed understanding of how insurance portability works.

2.) How does portability affect pre-existing condition coverage?

According to the IRDA, if an insurance company decides to port your policy, the insurance company will have to extend the coverage to any pre-existing conditions that the policyholder may have. A few things to keep in mind are that it is the insurance company’s prerogative when it comes to accepting or declining a portability request.

Further, the insurance company may choose to either increase or decrease the premium amount. You must be cognizant of this and ask your new insurance provider about it before initiating a portability request.

3.) Are there any limitations to insurance portability?

Some limitations of portability include:

  • Only comparable insurance policies can be ported. For instance, a comprehensive health insurance policy can be ported to another comprehensive health insurance policy. A family floater policy can be ported to another family floater policy.
  • The policyholder can only initiate a portability request 45 days prior to the renewal date of his old insurance policy.
  • The new insurance company may choose to increase the premium. Be cognizant of this. Further, there may be certain other minor changes in the new policy bond that the policyholder must look into before taking the leap.
  • A portability request may be rejected by the new insurance company. It is not mandatory for an insurance company to accept a port request.

4.) How does portability affect the premium amount of the new insurance policy?

Portability may either increase the premium amount, decrease the premium amount, or even keep the premium amount the same. It is the complete prerogative of the insurance company to select the premium rate. These premium rates are largely determined by market conditions and the competitiveness of the insurance company. Be sure to check your new premium rates before porting.

5.) Can an insurance policy be denied for pre-existing conditions under portability?

Yes, it is up to the new insurance company to either accept or decline the portability request. You should have a detailed chat with your insurance agent about the portability request; he or she will give you an idea if the request is likely to be accepted or declined.

6.) How does portability impact claims for pre-existing conditions?

This is an especially important question and needs to be addressed with care. Firstly, it is absolutely necessary for the policyholder to disclose any pre-existing conditions to the new insurance company beforehand. If any information is held back, the insurance company may choose to reject any claim, citing a violation of the principles of insurance. Therefore, it is very important for the policyholder to be honest and truthful about this from the very beginning.

Now, once you have stated your pre-existing condition, the insurance company will assess it and may or may not insist on a waiting period. If the insurance company insists on a waiting period, then the policyholder will only be covered against this pre-existing condition after the waiting period gets over. For instance, if the new insurance company insists on a 12-month waiting period, the policyholder will only be covered against that particular condition after 12 months have passed.

There are also situations where the new insurance company may not insist on a waiting period for pre-existing conditions. In this case, the policyholder is covered against any pre-existing condition from policy inception.

Categories
Life Insurance

Top 5 notable impacts of COVID-19 on the life insurance sector in India

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Top 5 notable impacts of COVID-19 on the life insurance sector in India

COVID-19 changed the way a lot of us look at our life and health, and this not only changed our outlook but it also changed our behavior towards certain products and services. That being said, the impact of COVID-19 was much more prominent to the life insurance sector in India. Let us learn about the top 5 notable impacts of COVID-19 on the life insurance sector in India.

 

1.) Reliance on digitization and technology: As masks became mandatory and social distancing became the norm, the insurance industry followed suite. As per an IRDAI regulation, life insurance companies were instructed to limit people to people interactions and focus on incorporating contact less forms of communication. For instance, as per an IRDAI regulation, insurance companies were now instructed to stop sending physical copies of insurance policies to customers. Soft copies through email were encouraged.

Further, there was an advent of digitization that led to online verification of identity and address proof through online portals and mobile apps. Lastly, even payment of insurance premiums was encouraged to made through online and contact less mediums. This reliance on digitization and technology has led to a more cost efficient insurance product.

 

2.) Increase in demand in both health and life products: As per the IRDAI, there has been a fantastic growth of 32% in life insurance policy sales from June 2021 (1,606,343 policies sold) to June 2022 (2,132,823 policies sold). This increase in life insurance policy sales was fueled by the increase of fear in the general public due to the COVID-19 pandemic. This trend of growing life insurance sales is likely to continue going into 2023 and beyond.

 

3.) Reduction in invest-able income: The increase in life and health insurance sales have had an inverse effect on the invest-able income in the short term. This is because as people are dealing with the rising costs of insurance premium, they have lower residual invest-able income.

 

4.) Alterations in life insurance underwriting: Life insurance companies have generally taken a more cautious approach when it comes to underwriting life insurance policies post the COVID-19 era. This is done by increasing application scrutiny and asking potential policyholders to undergo a battery of health tests before disbursing a life insurance policy in their name.

 

5.) Increased penetration of insurance products: India’s life insurance penetration was a lowly 2.82% in 2019, this was far lower compared to the life insurance penetration in countries like USA (52%) and UK (32%)
That being said, the COVID-19 pandemic at least pushed India’s life insurance penetration to the close to 3.2%, which is near to global average.

Frequently asked questions

  • What is the life insurance penetration in India (As of 2020)

    3.2%

  • Has penetration in life insurance increased post the COVID-19 era?

    Yes, penetration increased from 2.82% to 3.2%.

  • What are some examples of digitization in the life insurance sector?

    Top 3 Examples of digitization include:

    1. Online premium payments
    2. Incorporation of blockchain technologies
    3. Incorporation of data analytics

     

  • Categories
    Health Insurance

    How to port a health insurance policy? (Easy Steps)

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    How to port a health insurance policy? (Easy Steps)

    A health insurance policy is a contract between an insurance company and the insured. Even though it is usually a long term contract, it is not mandatory for the insured person to continue with the health insurance company in perpetuity. The insured can easily replace his old insurance provider with a new one; This process is called insurance porting and this feature was introduced by the IRDA of India.

    Let us now address some of the most important questions with respect to porting your health insurance policy:

    • Why would you want to port your health insurance policy?
    • What are the benefits of porting your health insurance policy?
    • What are the steps of porting your insurance policy?
    • What are the documents required to port an insurance policy?
    • What are some special points to keep in mind?

    Why would you want to port your health insurance policy?

    There are a variety of reasons why a person would want to port their health insurance policy. It is possible that he or she may be getting a better premium rate, he or she may be unhappy with the customer support, or he or she may be getting better bang for their buck with another insurance provider. All of the above are valid reasons for a person to port their health insurance policy.

    What are the benefits of porting your health insurance policy?

    Let us talk about some of the most pertinent benefits in porting a health insurance policy:

     

    Lower premium rates: The IRDA of India has created an environment of high competition among insurance companies in India. Due to this, insurance companies are constantly looking to get more customer by slashing premium rates. A policyholder can leverage this situation and look to port their policy to another insurer.

    Better coverage: Similar to the tactic of reducing premium rates, insurance companies also provide additional services, perks and additional coverage to attract customers. You can take advantage of this.

    Better service: At times, a customer may be satisfied with the premium rates and the coverage provided by his current insurer but he may be highly dissatisfied by the kind of service provided to him. This is where he may opt to port his policy from his current provider to another company that has a track record for providing better customer service and satisfaction.

    Higher claim settlement ratio: The claim settlement ratio is the percentage of claims a health insurance company settles. For instance, if a health insurance company receives 100 claims, and settles only 95 claims, the company’s claim settlement ratio is 95%. A high claim settlement ratio should be of paramount importance while considering buying a health insurance policy.

    What are the steps of porting your insurance policy?

    Let’s now understand the steps of porting your insurance policy.

    Step 1) Intimate your new health insurance provider

    Once you have zeroed in on your new health insurance provider, initiate a portability request with them. Ensure that you have placed this portability request 45 days prior to the renewal date of your current policy.

    Step 2) Fill-up and submit the portability form

    The insurance company will now provide you with a portability form and a proposal form. You will need to fill-up these forms accurately and honestly and furnish them to your new insurance provider.

    Step 3) Port to your new insurance provider

    The insurance company will now take a maximum of 15 days to decide on your application. If the new insurance company decides to port your account, you will now have an insurance contract between yourself and your new insurer. The old insurance contract will now be terminated.

    What are the documents required to port an insurance policy?

    The following documents will be required to initiate a porting request:

    • Policyholder’s identification documents and address proof (Aadhar Card, PAN Card, etc)
    • Old policy bond
    • Details pertaining to any previously made claims
    • proposal form and portability form

    What are some special points to keep in mind?

    There are 2 important points that you need to keep in mind before porting your health insurance policy, they are:

    No claim bonus: It is imperative to keep in mind that your No Clam Bonus (NCB) if any is carried on from your last insurer to your new insurer. You do not want to miss out of any NCB coverage that you may have accumulated in your last insurance policy.

    Coverage: Another very important aspect to keep in mind is if there is any divergence in the level of coverage provided by your old insurer and your new insurer. If your new insurance provider provides additional coverage, then that is fine but there should not be less coverage than before. Check the policy brochure and policy bond in detail before taking the leap.

    Are you looking for a new insurance policy or a policy renewal? Reach out to us and let us assist you.

    Frequently asked questions

  • Can you port your health insurance policy in India?

    Yes, you are eligible towards insurance portability as per the IRDA of India.

  • How many days prior do I need to inform my new insurance provider about portability?

    You must ensure that you inform your new insurance provider 45 days prior to your current insurance policy's renewal date.

  • Is NCB carried forward after portability?

    Yes, NCB is generally carried forward. But you must verify this with your new insurance provider.