What are the advantages and disadvantages of health insurance portability?
Portability is a customer centric decision that allows flexibility to the insured member to choose between insurance brands during the lifespan of being insured. The move is expected to enhance service standards amongst all insurance players while increasing the level of competitive intensity among insurers in order to retain their existing customers. In the long run, it would be the company with better services that will gain by winning the trust of customers.
On the flip side, it would be imperative for all insurance players to be mindful of the possible abuse and misuses that may arise due to the changes in the regulation. Underwriting principles of the insurance companies should be followed with at the time of accepting any proposal with portability requests to ensure that transition is smooth.
One possible consequence of portability is that loss ratios may go up as reserves accumulated for waiting periods and pre existing conditions are not transferred equally among insurers.
Under what circumstances should you go for a portability of your existing policy?
Portability permits customers the flexibility to switch insurers and simultaneously protect their accrued benefits under an existing health insurance policy. It also allows customers’ protection against discontinuity and consequential loss of pre-existing diseases cover.
Hence, in case the customer perceives a gap between what is promised and delivered by an insurance company in terms of service or benefits, he or she can now move out and opt for a similar plan with other insurer of his or her choice.
What should you look at before deciding on the new health insurer while going for portability?
Customers should keep in mind that every policy is different and each insurance company is governed by their underwriting principles. Hence they should choose the one they deem fit and take an informed decision.
The new regulations suggest the customer can choose the new insurance plan in totality (both in terms of the premium amount, as well as the benefits offered). Hence, it is important for the customer to completely understand the benefits as offered under their existing policy and subsequently match them with the plan that they wish to port to.
We strongly suggest that once a customer takes an informed decision and receives cover by an insurer, the person should read through the policy schedule and policy wordings document. Like we do at Apollo Munich, many other insurers have also started to give a synopsis document (customer information sheet) along with the policy wordings which would help the insured (customer) to quickly understand all the coverage and exclusions.
We strongly suggest the customers to take an informed decision while exercising the right to port from one policy to that of another. Although tempting, porting to a lower premium product is not safe as one may reduce their benefits as well as inclusions, exclusions, waiting periods, etc while opting for a lower value products.
What if you own a unique product and you don't have a similar alternative with another insurer to go for portability? Can you still do it?
As per the guidelines on portability issued by IRDA, the policyholders can port their policies to another insurer with the pre-existing conditions and time bound exclusions; only for a similar policy offered by the incumbent insurer. Having said that, I believe with more than 25 companies offering health insurance plans the chances would be very less for a customer to not being able to find a plan that suits him the best in terms of value and service promises.
How often should you review your health insurance portfolio and what are the things to look at?
We believe that one should review his or her health insurance policy on the basis of benefits, exclusions and adequacy of the plan, on renewal. Also, one should consider a review in case he or she wishes to convert an individual policy to a family floater or to endorse new family members on an existing plan.
With progressive age and inflation, one should consider increasing the sum insured levels to ensure adequacy of the plan at the time of crisis.
Lastly, how to ensure a relatively hassle-free health insurance for yourself?
It is imperative for a policy holder to read and understand the claim procedure laid down by the insurer at the time of buying a policy. It helps in reducing the panic at the time of emergency. Also, we advise customers to provide correct information related to occupation, income, diseases, if any, while applying for insurance. Any misleading declarations could lead to denial / delay of claim later on.
In order to avoid hassles at the time of filing a claim, the beneficiary must intimate the insurer as soon as possible on the insurance company’s/claim’s toll-free number, preferably before hospitalization. The claimant should consult the call center executives of the company while filing the claim/pre-authorisation form, as they are well-trained to explain the right procedure for filing the same.