Benefit of lakhs or loss of thousands? This game of 'No Claim Bonus' is hidden in the Health Insurance portability

Porting a health insurance policy i.e. changing it from one company to another is a beneficial option, but there is a big catch regarding No-Claim Bonus (NCB). If you do not choose the right base sum insured at the time of porting, then you will not get the benefit of your NCB accumulated over the years. To avail the benefit of NCB in the new policy, you should choose a new base sum insured equal to the sum of your old base sum insured and NCB.

When the time comes to renew your health insurance policy, you often start getting calls from many companies. They ask you to port the policy to their company by luring you with lower premium or better facilities. In such a situation, you are also forced to think, especially when you are not happy with the service of your existing insurance company or are facing a huge increase in the premium. It is your right to port your policy and it is beneficial too, but there is a subtle condition hidden in it, which if not paid attention to, can cause you a big loss.

This condition is related to your No-Claim Bonus (NCB). On porting the policy, you get benefits like waiting period, but the benefit of NCB is not transferred that easily, and this is where most people make mistakes. The Insurance Regulatory and Development Authority of India (IRDAI) gave this facility to policyholders in 2011 that they can transfer their policy from one company to another without any loss. It is very important to understand this process properly, so that you do not end up in loss instead of benefit.

What is the benefit of portability and waiting period?

First of all, let us understand in simple language what portability is. It allows you to transfer your existing health insurance policy from one insurance company to another without any hindrance. Its biggest advantage is that you get the benefits you get in the old policy, such as credit for waiting period, in the new policy as well.

Let's understand with an example

Suppose your old policy had a waiting period of 3 years for pre-existing diseases (PEDs) and you have completed 2 years with your current company. Now when you port the policy to the new company, you will have to complete only 1 more year of waiting period. You will not have to wait for 3 years again.

No-claim bonus is a big deal!

Now let's come to the most important issue, which is No-Claim Bonus (NCB). NCB is the reward that the insurance company gives you for not making any claim for the whole year. It usually comes in the form of an increase in your sum insured, that too without any additional premium. The real confusion in portability starts from here.

Many people think that their accumulated NCB will automatically get added to the new policy, but this does not happen. According to the rules of IRDAI, you get the benefit of waiting period only up to the total sum insured (base + NCB) of the old policy. If you take more than this cover in the new policy, then a fresh waiting period will be applicable on the additional amount.

What to do while porting the policy?

While porting the policy, it is most important to choose the right base sum insured. If you have accumulated a good amount of no-claim bonus in your previous policy, then keep these things in mind:

Do the right calculation: Before taking a new policy, add the base sum insured and the accumulated NCB of your old policy.

Choose the right cover: Choose a base sum insured in the new company that is at least as much as the base sum insured and the NCB of your old policy.

Ask everything clearly: Ask the new insurance company clearly what will happen to your NCB and how it will be shown in the policy.

Read the documents carefully: Read the policy document carefully so that you know all the terms and conditions.

Health insurance portability is the right of the customers, which gives them the freedom to choose a company with better service and facilities. However, porting a policy just because of the lure of a lower premium can be harmful. It is especially important to understand the rules of no-claim bonus. If you are a little careful and choose the base sum insured of your new policy correctly, you can take full advantage of portability without any loss and protect your hard-earned benefits.

Frequently Asked Questions (FAQs)

1. Is there any charge for porting health insurance?

No, as per IRDAI rules, insurance companies cannot charge any additional fee for porting the policy.

2. When to apply for porting a policy?

You have to apply for portability to the new company at least 45 days before the renewal date of your existing policy.

3. Can I port any type of policy?

You can port only similar types of policies, such as an individual health policy to another individual health policy.

4. What if the new company rejects the porting application?

The new company has to take a decision within 15 days, even if the application is rejected, you still have time to renew your old policy.