“Unlocking the dark secret of Portability” Exploring the Pros and Cons!

Portability Conditions

Now questions are raised if there is a policy transfer from one insurance company to another insurance company i.e. risk transfer is going on, in which waiver of the period is available, then it is necessary to double cross-check the insurance company, which is also correct. Some conditions of portability have been prescribed by IRDAI, of which I am telling the top 5 conditions.

• Portability is only allowed at the time of renewal, 45 days before the policy expires from the existing company, but not before the 60 days, sometimes the internal guideline of the insurance company will reduce it to 45 days, but not before the 60 days.
• The claim should not be more than 6 months from the existing insurer.
• If there is a claim for any serious illness in the last insurance company, the policy cannot be ported, no other insurance company will want to take this risk
• In health insurance, a term used to avoid giving a claim to the insurance company is “Break in Policy” i.e. if the existing policy has already expired, it cannot be ported to the previous insurance company if it happens to the policyholder. No coverage will be provided during this period and there is no time-bound waiting period option.
• If the insured person has any medical history, then very strict medical underwriting will be done whether they have to take the risk of the new insurance company or not.

Pros and Cons of Portability

Health insurance policy gets ported but there is some loss to the policyholders and some benefits too, which I am explaining here.

First of all, I am explaining the top 5 benefits “PROS” of portability which are as follows:-

Wider Coverage –

Policy coverage will be provided with a new insurance company plan that will be in most cases, the policy will be much better than the previous insurance company

Premium Rates

Sometimes the premium rate might be cheaper than the existing insurance company. So that little bit of financial burden was reduced for changing the insurer.

Better Claim Experience

Policyholders who are unhappy with the claim process of the exiting insurance company may consider porting their policy to look at the claim history, process etc. The policyholder is likely to get a pleasant claim experience.

Overall Services

The service level may improve in the new insurance company.

Amazing Wellness Plan

In today’s modern lifestyle, a policy port is also made for health concession policyholders, and wellness features of health insurance, and health insurance companies also provide discounts on renewal premiums every year as per the fitness score of the policyholders.

Now let us know about 5 important reasons for the disadvantages “Cons” of portability as follows:-

Moratorium Period Impact

Moratorium period, if the policyholder has paid the policy premium for 5 consecutive years the insurance company cannot deny the claim, except for fraud and permanent exclusions as per the policy terms and conditions. IRDAI has implemented this from April 1, 2024. Now, to avail of the benefit of the moratorium period, the policyholder will have to pay the premium for the next 5 years in the new insurance company. Its biggest loss occurs in the port.

Claim Experience Impact–

If the policyholder’s claim experience has changed a lot in the last insurance company, it may not be the same in the new insurance company. And according to me, if there are multiple claims in the policy and the experience of the claim is increased then the policy should not be ported

Wellness Proposition Impact

The wellness proposal in the health policy plan in the last insurance company may have been experienced satisfactorily, but this may not be the case in the new insurance company.

Losing the Loyalty Faith from Insurer

By porting the policy again and again, the insurance company can see the message of the customer and if a claim is raised on this policy, there can be problems in cashless and also in reimbursement cases, one can have to go through a lot of investigation.

Claim Probability for Insurer and Insurance Intermediates

In-port policy always claims probability is very high, compared to the fresh policy, because for some specific treatments/surgeries, there is a waiting period of 24 months and for some pre-existing diseases also there is a waiting period of 3-4 years as per the plan. It’s hot. Now any insurance company or the insurance agent will not want to increase the unnecessary claim probability.

Conclusion- based on the above points, advantages – and disadvantages, the policyholder can navigate the decision about their health insurance policy port into another insurance company. Yes, if the premium is higher then it does not matter much even in a vintage policy at an older age, so even if you think of porting the policy, it is true in some cases but always navigate the points mentioned above