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Mediclaim portability in India

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What is portability?

Portability is a facility which allows health insurance policy holders to transfer their insurance coverage from one insurance company to another without losing any benefits that customers have accumulated with the first company. In the past, prior to IRDAI’s regulations regarding portability, when customers ported or transferred coverage from one insurance company to the other it would have resulted in losing the waiting period for coverage of pre-existing disease benefits.

After the new IRDAI regulations are in force, IRDAI protects customers right to port or transfer the policy to any insurance company and has laid down regulations that the new insurer "shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period". This is applicable not just for one insurer to another but also from one plan to another with the same insurer.

According to IRDAI regulations

Customers Rights are -

  • You can port your policy from and to any general insurance company or specialised health insurance company.
  • You can port any individual/ family policies.
  • Your new insurer has to give you the credit relating to waiting period for pre-existing conditions that you have gained with the old insurer.
  • Your new insurer has to insure you at least up to the sum insured under the old policy.
  • The two insurers should complete the porting as per the timelines prescribed in the IRDAI (Protection of Policyholders’ Interests) Regulations and guidelines.

Mode of Payment allowed for Premium paid for Health Insurance

It is important to note that to claim the income tax benefit, the individual is required to pay the health insurance premium out of his taxable income during the financial year by any mode other than cash. This means, if you are paying your health insurance premium in cash, you will not be allowed to claims an income tax exemption under section 80D for the premiums paid. One can pay your premium amount by cheque, draft, Internet banking or even by credit card to get tax advantages under section 80D. This restriction (payment of cash) however is not restricted to Medical Health check ups, where cash can be the mode of payment for the same and this will still be eligible to be claimed as a deduction.

Conditions

  • You can port the policy only at the juncture of renewal. That is, the new insurance period will be with the new insurance company
  • Apart from the waiting period credit, all other terms of the new policy including the premium are at the discretion of the new insurance company
  • At least 45 days before your renewal is due you have to:
    1. Write to your old insurance company requesting a shift
    2. Specify company to which you want to shift the policy
    3. Renew your policy without a break (there is a 30 day grace period if porting is under process)

What if you are not satisfied with your existing health insurance premium, feature or service of an insurance company?

The simple answer is to use the Health Insurance Portability option. Health Insurance Portability is a provision given by the IRDA that allows health insurance policyholders to switch their policy from one insurer to another while retaining the benefits. Hence when you change your health insurance policy from one insurance company to another, you don’t have to lose the benefits you have accumulated. In the past in health insurance policies, such a move resulted in your losing benefits like the waiting period for covering "Pre-existing Diseases". Now IRDA protects you by giving you the right to port your policy to any other insurer of your choice. It has laid down that your new insurer “shall allow for credit gained by the insured for pre-existing condition(s) in terms of waiting period”. This applies not only when you move from one insurer to another but also from one plan to another with the same insurer.

Health Insurance Portability is allowed to all individual, family floater and group health insurance products. However, in case of group health insurance portability, you can’t move from one insurance company to another. Instead, you can port it within the same insurance company.

As per the IRDAI’s circular on Portability, following are some of the Rights and Conditions of Portability:

Rights

  • You can port your policy from and to any general insurance company or standalone / specialised health insurance company
  • You can port any individual/ family policies
  • Your new insurer has to give you the credit relating to waiting period for pre-existing conditions that you have gained with the old insurer
  • Your new insurer has to ensure that the new insurance plan offers a sum insured atleast up to the sum insured under the old policy
  • The two insurers should complete the porting as per the timelines prescribed in the IRDA (Protection of Policyholders’ Interests) Regulations and guidelines

Conditions

  • You can port the policy only at the time of renewal. That is, the new insurance period will be with the new insurance company
  • Apart from the waiting period credit, all other terms of the new policy including the premium are at the discretion of the new insurance company
  • If there is a break in existing policy, then you are not eligible for porting
  • At least 45 days before your renewal is due you have to
    • Write to your old insurance company requesting a shift
    • Specify company to which you want to shift the policy
    • Renew your policy without a break (there is a 30 day grace period if porting is under process)
IRDAI has created a web-based facility to get and maintain data about all health insurance policies issued by insurance companies to individuals so that it can be accessed by the new company to which a policy holder wishes to port his policy. This enables the new insurer to obtain data on history of health insurance of the policyholder wishing to port his policy.

So why does anybody opt for Portability of their Policy? Based on the market feedback, the primary reasons why many people opt for porting their policy are as follows:

  • When the existing health insurance company is offering poor claims or after sales/policy handling services
  • When you feel the existing cover is not sufficient to cover specific diseases, and the existing insurance company doesn’t provide the expected coverage
  • Specific clauses like Co-payment, Deductible, Ailment and other Capping which one discovered during the free look period and are not acceptable
  • When one becomes aware of a better product in the market with more comprehensive benefits and competitive price than the existing health insurance and the existing provider can’t offer the same cover
  • Hidden clauses, not clearly mentioned on the policy – no transparency
  • Loading of the premium by the insurance company following a claim during the year

Important Principles of Health Insurance Portability

While health insurance portability is a vast subject, we have tried to condense the same keeping in mind some important aspects of the process of porting a health insurance plan…these include:
  • Individual, Family Floater, and Group Insurance products are eligible - Health insurance products offered by general insurance and stand alone health insurance companies like Individual, Family Floater and Group Health Insurance products are eligible for Health Insurance Portability. Under Group Health plans, one can’t port from an insurance company to another
  • Prior Notice of 45 days is Mandatory - Everyone must apply for portability of their health insurance policy to the new insurer or the existing insurer (for porting a product), 45 days prior (but not more than 60 days) to the premium renewal date of an existing policy. Insurance company may reject your portability application if they found that the application for portability is submitted within 45 days of the renewal of the existing policy.
  • Policy Categories for Porting - Only similar health policies can be ported – a policyholder can port out from a reimbursement plan to another reimbursement plan or from one top-up to another top-up plan. You can port from individual to family floater and vice versa. Insurance companies must acknowledge a portability application within three days of receipt.
  • Timing of Portability - Health insurance portability is allowed only during the renewal time of the current policy, one cannot apply for portability during the middle of a policy year. Also, it is also important for policyholders to renew their policies promptly, without any breaks. Any delays from the insurance company end may however be accepted.
  • Decision Turnaround Time on Portability cases – The new insurance company must revert to the applicant within 15 days of receiving the portability request, subject to submission of all the required documents. If you submitted all the necessary documents along with the prescribed application form for portability, then new insurance company must inform you about their decision within 15 days. Otherwise, they will not have rights to reject it after 15 days.
  • New Insurance Company may Reject your application – One must be aware that there is no such obligation from health insurance companies that they must accept a policy which has been ported to it. They will treat it as a new application and apply their underwriting rules and make a decision on accepting or rejecting the application. In some cases, they may request for medication examination, post which based on the results may accept the application
  • Revision in Sum Insured - Policyholders could apply for an increase in the sum insured under the current plan when they port. The acceptance of this revision request will be as new insurer’s underwriting norms and they can accept or reject the request and may or may not levy loading. Importantly the new insurer must offer a minimum sum insured equal to the old policy’s original sum insured.
  • Accumulated Benefits
    • Pre-existing Diseases Waiting Period - If you apply for a revision in coverage for which there is an increased waiting period to be served , the insured will need to serve the difference to avail benefits under the new plan. If the first insurer had a three-year waiting period, and you had served it, but the new insurer mandates four years, you need to serve one additional year to get pre-existing diseases coverage under the new policy.
    • Accumulated No-Claim Bonus – If your existing policy is of ₹2 lacs and you accumulated the no-claim bonus of ₹1 lac, and then you opt for portability. Now the new insurer will assume the coverage of ₹3 lacs and issued the policy, but premium will need to be paid by you on ₹3 lacs and not ₹2 lacs….in the existing policy this accumulated bonus of ₹1 lac was FREE, but in the new insurance company, you will need to pay for this additional coverage.
  • Grace Period & Porting Charges – All port applicants are allowed a 30-day grace period for policy renewal, in case porting is still under process/new insurer’s decision is pending. Also, there are NIL charges for porting the policy from one insurer to another.

Advantages & Disadvantages of Portability

Like any other process, there will be some advantages and disadvantages with the process of porting one’s health insurance policy also…they are highlighted in the table below:
  Advantages Disadvantages
1 Better Featured Product and more competitive premium Loss of Accumulated benefits like bonus (NCB) from being free to being paid for
2 Hopefully better policy handling and claims servicing Portability can be done only at the time of renewal
3 Policy can be more customised to the expectations and requirements of the insured New insurer will review the risk and may reject the proposal or charge a premium loading based on their underwriting rules
4 Insured will be more thorough in reviewing the policy terms and conditions to understand all the benefits/exclusions etc Portability is allowed only to similar type of policies
5 Revised minimum sum insured will include NCB

What are the Documents required for Health Insurance Portability?

While applying for porting of your existing health insurance plan, the following are the documents that need to be submitted to the new/prospective insurance company:
  • Portability Application form completely filled and providing accurate information, including the reason of the portability request
  • Existing Health Insurance policy document
  • Self-declaration by insured about no-claims made in last year (if there are no claims).
  • If there is a claim in existing policy, then discharge summary, investigation and follow-up report copies regarding the same. If there is a past medical history, then consultation papers, prescription, investigation, treatment and report copies.
  • Latest renewal notice from the existing insurer with a clear mention of coverage continuity
  • Other documents which may vary from insurer to insurer

What is the Process Followed of Health Insurance Portability?

There is a defined process by the IRDAI on Health Insurance portability which is to be followed by all insurance companies…A step by step process is as follows:
Step 1 Collate all documents required for the portability process and fill the application form in detail providing all relevant information
Step 2 Once you submit the form along with necessary documents, the new insurance company will seek the necessary details of medical history and claim history of the concerned policyholder from the existing old insurance company. This will be done through the web portal of the IRDAI
Step 3 On receiving such request from the new insurance company, the existing insurance company will submit the required data to IRDAI through the portal within 7 days.
Step 4 On receipt of all the data through the portal from the existing insurance company, the new company will underwrite the proposal, evaluating and approving/rejecting the application. Maximum time allowed for this process is 15 days.
Step 5 If approved, the applicant then pays the requisite premium and the new insurance company issues the policy with the accepted terms

Rejection of Portability Application

As mentioned earlier, the new insurance company has the prerogative to accept or reject a portability application based on their underwriting guidelines. IRDA has given insurers the authority to reject a portability application, if it is not line with the company’s terms, conditions, and underwriting philosophy. Some common reasons for rejection include:
  • Inadequate, Incomplete and Incomplete Information
  • Poor claim history - Insurers are wary about applications where the insured has filed many health claims in the earlier years
  • Advancing Age of the Insured – some insurance company may be reluctant to assume the risk of underwriting an elderly insured, eventhough they may be in good health
  • Unsatisfactory family history or ailments or pre existing health conditions
  • Delay in document submission / Non submission of important documents for the proposal evaluation
  • Break in the existing policy renewal – insured may not have remitted premium on time to ensure the policy was renewed in time the year

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