You’ll get to switch insurers, retain benefits too

Source:13 May 2010, 0253 hrs IST,Debjoy Sengupta,ET Bureau
   


KOLKATA: Portability in health insurance is likely to become a reality soon. The General Insurance Council has recently submitted its revised format for portable health covers to the Insurance Regulatory & Development Authority (Irda). Insurers will be able to sell such health covers once the regulator has approved it. And policyholders will be able to switch their health cover providers with the same benefits retained once they have bought this cover.

Earlier, the council — a representative body of all general insurance companies — had submitted a model portable health cover with the regulator. But it did not find much favour with the regulator who had asked the Council to rework the insurance cover to include a wider section of individuals and offer increased coverage. Following the directive, the Council has increased the maximum age of entry for the policy from 40 years to 65. Sum assured for the policy was also enhanced from Rs 1 lakh to Rs 2 lakh.

Theoretically, a portable health insurance policy refers to the ability to switch health cover providers at will, yet retain bonuses accrued and have pre-existing diseases covered. Health insurance providers offer bonuses in the form of a reduced premium or increased covers with each claim-free year. After four years, pre-existing diseases also get covered. The earlier policy framed by the Council did not cover pre-existing diseases.

According to a source involved in the process, a Rs 1 lakh cover will be available at Rs 1,000 for an 18-year old. However, the premiums will be higher for higher age of entry.

Interestingly, to avail hassle free portability, one will have to buy this particular health cover. For other health products, insurers have the option of taking a call on a case-to-case basis.

However, for this policy, all insurers have to oblige in case the policy holder wants to switch companies.
Hence, in effect, it might mean that portability will be available when an individual buys this policy from any insurer. Which means that one may have to start afresh with the new standard policy. It will not have any accrued bonuses and will not cover pre-existing diseases from day one. Under this policy, bonuses will start accruing after a year and pre-existing diseases will be covered after four years.

It may be good news for individuals planning to buy a new cover, but senior citizens — those who bought their mediclaim policies long back, by virtue of which they enjoy bonuses and have pre-existing diseases covered — may not be excited.