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pays for your hospital bills for diagnostics, surgery etc.

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Health Insurance Portability – Hype and Reality

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Implemented from October 1, 2011, portability in Health Insurance was introduced with an objective to improve service standards among insurance providers and promote healthy competition that should lead to innovation in product offerings. There is much hype around portability as it reduces the hurdle for a customer to change his insurance provider, but due to practical constraints reality is a bit different.

The three portability hypes and reality -

REGARDING Pre-existing DISEASES - Under any health insurance policy, for pre-existing diseases, there is a Waiting Period about one to three years for you to be eligible for a cover for these diseases.

2)Until the introduction of portability in health insurance in India, if you were to switch your health insurance policy, the counter for the waiting period would be reset to zero and you would have to wait for another two to three years, in line with the terms of the new health insurance policy.

But now under the portability regime, waiting period for pre-existing diseases is portable i.e. time spent with previous Insurer for pre- existing disease will be considered. But this is possible only if the previous Policy was maintained without break, besides you must apply for the new insurance at least 45 days prior to the expiry of your current policy. It is also pertinent to note that the new insurer can as well reject your Proposal or raise your Premium or you may not get the same sum assured. If you have had many claims in the past, the new insurance company would always try to keep you off their customer list.

2)REGARDING Claim BONUS - As per the norms of portability, no claim Bonus can be transferred. In such scenario, you will have to pay higher premium for same cover under new policy because as per IRDA regulations No claim bonus can be transferred to new insurer but premium will be charged on the enhanced amount. Suppose you bought a policy with the sum Insured of Rs 3 lakh a few years back and you have Cumulative Bonus of Rs. 60,000, and you wish to switch to a new insurance provider. In this case, your new sum Assured would be Rs 3.6 lakh and the premium would be levied on the new amount i.e. Rs 3.6 lakhs. Moreover, there is a possibility that the new insurer may provide health insurance cover for Rs 50,000 and in multiples thereof. Accordingly, the Sum Assured shall automatically stand increase to Rs 4 lakh, since the insurer cannot provide cover for Rs 3.6 lakh. The premium one pays shall be based on cover of Rs 4 lakh. However, portability benefits shall be available only up to Rs 3.6 lakh and not on the entire cover of Rs 4 lakh.

3) REGARDING GROUP HEALTH INSURANCE POLICY - If you have health insurance portability from a life insurer like LIC or a group health insurance plan, it may not be possible for you to switch your plan under health insurance portability. The portability benefits are allowed only for individual and family floater policies. Those covered under group health insurance policy would have to first shift to individual health insurance plan of the same insurer and then in future they can shift to a new insurance provider.