Portability in health insurance and Life insurance cancellation

Portability" means the right accorded to an individual health insurance policyholder (including family cover), to transfer the credit gained for pre-existing conditions and time bound exclusions, from one insurer to another or from one plan to another plan of the same insurer.

Clause No. 12 of Schedule - I of IRDAI (Health Insurance) Regulations 2016 specifies that on receipt of the data from the existing insurance company, the new insurance company may underwrite the proposal and convey its decision to the policyholder in accordance to the applicable regulatory framework relating Protection of Policyholders' Interest Regulations.

Clause 18 of Schedule - I of IRDAI (Health Insurance) Regulations 2016 specifies that the portability shall be applicable to the sum insured under the previous policy and also to an enhanced sum insured, if requested for by the insured, to the extent of cumulative bonus acquired from the previous insurer(s) under the previous policies.

A policyholder desirous of porting his/her policy to another insurance company shall apply to such insurance company to port the entire policy along with all the members of the family, if any, at least 45 days before, but not earlier than 60 days from the premium renewal date of his/ her existing policy.

How to port your Health Insurance Policy?

Follow these steps to port your Health Insurance:

First of all, you need to choose the Health Insurance Policy that matches your requirements the best. Once you have finalised the insurer, you have to visit the new insurer's website and place a porting request. You can also make the porting request offline i.e. by visiting the nearest branch of the insurer or you may call the helpline number of the insurer.

After the insurer receives your request, the insurance company representative will call you to confirm the request and guide you through the porting process.

The insurer will send you the IRDAI portability form and proposal form, which need to be carefully filled out and sent back to the insurer along with the required documents.

Upon receiving the documents, the insurer will contact your current insurer to obtain your medical history and policy details.

The insurers are liable to share this information for such requests through IRDAI.

Once the new insurer receives all the required details, they will start with the underwriting process. This is when the new insurer analyses your profile through an underwriter and decides whether or not to approve your insurance proposal.

The underwriting process must be completed within 15 days of receiving the details from your current insurer. Failing to do so or any delay in the process is considered as you are covered under the new Health Insurance Policy.

Here's a general list of documents you need to submit while porting your Health Insurance Policy:

The IRDAI portability form

Proposal form

Identity proof

Address proof

Existing insurance policy (could be obtained from your current insurer)

Documents related to medical history (could be obtained from your current insurer)

Claim history (could be obtained from your current insurer)

Declaration of no-claim, if applicable (could be obtained from your current insurer)

What are the guidelines for Health Insurance portability?

The IRDAI has laid down certain guidelines and rules that have to be followed by the insurers and policyholders.

1. Same Type of Policy:

Portability is allowed only across the same type of policies. This means you cannot completely change the plan, coverage, and type of the policy. For example, you can port from one Basic Health Insurance Plan to another Basic Health Insurance Plan or one Top-up Health Insurance Plan to another Top-up Plan.

2. Same Type of Company:

The company you are migrating should be the same type. For example, from general insurance company to general insurance company or specialised health insurance company to specialised health insurance company.

3. At the Time of Renewal:

The portability is allowed only at the time of policy renewal and not at any other time.

4. Informing the Insurer:

If you wish to port your Health Insurance, you need to inform the current insurer in writing at least 45 days in advance. You should also mention the name of the insurer you wish to switch to.

5. Response from the Current Insurer:

A new insurer needs to acknowledge your portability request within 3 working days of receiving the request and make a decision on it within 15 days of receiving all the required documents. In case of any delay, the new insurer must request the current insurer to provide you with a short-term insurance cover. This cover is provided for up to 30 days and the premium is calculated on a pro-rata basis.

6. Free of Cost Service:

The Health Insurance portability is offered free of cost and insurers cannot charge any fee for providing this facility.

Guidelines on Migration and Portability of health insurance policies Reference is invited to Regulation 17(iv) and clause 16 of Schedule I of IRDAI (Health Insurance) Regulations 2016. In terms thereof, following guidelines are issued: A. NORMS ON PORTABILITY:

1. Portability shall be allowed under all individual indemnity health insurance policies issued by General Insurers and Health Insurers including family floater policies. B. NORMS ON MIGRATION: 1. In addition to the migration option to be provided to the policyholders as specified under Regulation 17(i) of IRDAI (Health Insurance) Regulations 2016: i. Every individual policyholder (including members under family floater policy) covered under an indemnity based individual health insurance policy shall be provided an option of migration at the explicit option exercised by the policyholder; a. to an individual health insurance policy or a family floater policy, or; b. to a group health insurance policy, if the member complies with the norms relating to the health insurance coverage under the concerned group insurance policy.

2. Every individual member, including family members covered under an indemnity based group health insurance policy shall be provided an option of migration at the time of exit from group or in the event of modification of the group policy (including the revision in the premium rates) or withdrawal of the group policy: a. to an individual health insurance policy or a family floater policy.

3. Migration shall be applicable to the extent of the sum insured under the previous policy and the cumulative bonus, if any, acquired from the previous policies.

4. Only the unexpired/residual waiting period not exceeding the applicable waiting period of the previous policy with respect to pre-existing diseases and time bound exclusions shall be made applicable on migration under the new policy.

5. Migration may be subject to underwriting as follows: a. For individual policies, if the policyholder is continuously covered in the previous policy without any break for a period of four years or more, migration shall be allowed without subjecting the policyholder to any underwriting to the extent of the sum insured and the benefits available in the previous policy. b. Migration from group policies to individual policy will be subject to underwriting. c. Where underwriting is done, the insurance company shall convey its decision to the policyholder within 15 days as per Regulation 8(6) of IRDAI (Protection of Policyholders’ interests) Regulations 2017.

6. A policyholder desirous of migrating his/her policy shall be allowed to apply to the insurance company to migrate the policy along with all members of the family , if any, at least 30 days before the premium renewal date of his/her existing policy. However, if the insurer is willing to consider even less than 30 days period then the insurer may do so. 7. Insurer shall not levy any charges exclusively for migration. 8. Insurers shall clearly draw the attention of the policyholder in the policy contract and the prospectus that: i. Migration is allowed as per these Guidelines as amended from time to time. ii. Policyholder should initiate action to approach the insurer to exercise migration option well before the renewal date to avoid any break in the policy coverage.?

9. Individual members, including the family members covered under an indemnity based group health insurance policy shall have the right to migrate from such a group policy to an individual health insurance policy or a family floater policy, thereafter Portability shall be allowed as per Clause (1) above and in accordance to the norms specified under IRDAI (Health Insurance) Regulations, 2016.

10. These Guidelines are issued under the powers vested with Section 34 (1) of the Insurance Act, 1938 and will come in to force with immediate effect.

11. This has the approval of the competent authority.

How to cancel your life insurance policy

If you have purchased an insurance policy and are not satisfied with the benefits it offers, you can surely cancel it. Remember, you must cancel your plan during the free look/cooling period which is of 15 days so that you can get a refund of the premiums paid by you.

The general process to terminate your life insurance cover-

Inform your insurer: Once you know that the policy terms do not match your expectations, you should communicate your intention to your insurer regarding the cancellation in writing. Some insurance companies also prescribe a standard form for cancellation of policy during the free look period about which you should be aware of. However, while cancelling your policy, you should mention all the information such as your policy details, date of receipt of the policy document, the reason for cancellation in the application.

The process: After receiving the cancellation request, your insurer will get in touch with you to know the reasons for cancellation and try to provide alternate solutions. However, if one still wishes to cancel their policy, then he/she will have to download the cancellation form from the official website of the bank or get a copy from any branch office. After the cancellation form is filled and submitted, the bank will carry out the procedure for cancelling the policy. Remember, no refunds will be made if the policy is cancelled outside of the cooling/free-look period.

What can be the reason for cancelling?

Before cancelling your policy, it is important to evaluate the reason as to why you are cancelling it. It is important to do so because after cancelling your policy, you will lose the protection it might have given to you and your family. However, at some point in time, there may be some valid reasons due to which you decide to cancel your policy such as-

Switching to a new policy that is a better fit for you

Your purpose of buying the cover has changed

You cannot afford to pay premiums anymore

What are the alternatives available besides cancelling your policy?

If the primary reason for cancelling your policy is your inability to afford the premium amount. Then, in that case, you can contact your insurance provider and request a lower amount of life cover so that the premium amount payable also decreases. After becoming financially stable when you can afford to pay your policy premiums, you can upgrade your policy again. Your insurer will provide a few alternatives to you to retain the policy. If you find any of those suggested alternatives feasible, then there will be no need to cancel your life insurance policy.

Under what conditions are the surrender benefits payable?

On surrendering your policy before the completion of the policy term, a surrender benefit may be payable depending on the number of policy years that have been completed. Policies acquire a surrender value after three years. After completion of that specified period, a surrender benefit may be payable to the policyholder, provided the premiums for the specified period are paid.

Why should you avoid cancelling your life insurance policy?

The primary purpose of buying a life cover is to provide a secure financial future for your family. If you cancel the policy, they will not be able to take the benefits at the time of the financial crisis when the policyholder dies.

Purchasing a life insurance policy later can cost you more than what you are paying for your current policy. This is because, with the age of the individual, the risk cover also increases. Hence, insurers charge a higher premium.

No surrender benefit is payable if the policy is surrendered before the completion of the specified time, which is usually 3 years.

Certain bonuses and additions require the policy to be in force for a specific time. If you cancel the policy before the specified period, then you may lose the opportunity to enjoy such benefits.

Tax benefits under section 80C for premiums paid cannot be availed. Further, the deductions made from the gross income previously will be regarded as income in the year when the policy is surrendered.