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.