The world of insurance is ever changing. Health policies, especially, are always evolving to suit changing requirements and regulations. So, there is a possibility that one day you may get an intimation or email from your insurance provider stating that the Health Plan offered to you has been withdrawn or stopped. Insurance providers have the right to withdraw a health plan upon seeking approval from the Insurance Regulatory and Development Authority of India (IRDA).
Some of the reasons for which an insurance provider may withdraw a health plan are
- If the old policy is outdated and fails to meet the growing health insurance requirements, the insurance provider may make improvements in the old plan and issue a new policy in exchange for a higher premium.
- If the old policy is making underwriting losses and needs an upgrade.
- If IRDA comes up with some new regulations that affect the sustainability of the health plan. For example, in 2016, IRDA banned life insurance providers from selling indemnity-based health insurance products. Such health policies were then withdrawn from the market.
So, what are the options available to consumers whose existing health plans are set to be withdrawn by insurers?
Take Up The Upgraded Health Policy Offered By The Insurer
Upon withdrawing a policy, the insurer offers the consumers an alternative and upgraded health insurance policy. You can shift to this policy so that you do not have to lose out on the accumulated benefits on your original health plan.
For example, If you have a waiting period of four years on pre-existing diseases and have already spent two years on the current policy, you would need to spend another two years on the upgraded policy to start enjoying the benefits.
But premium on the new upgraded health plan with extra features will come in exchange for a higher rate. You can choose to reduce the sum assured so that the premium comes down and meets your budget.
But the cost of healthcare is rising and hence it is advisable not to reduce the sum assured. It also makes sense to stick with your insurer and shift to an upgraded health plan.
Buy A New Plan
You may opt to discontinue with the current health plan and buy a similar or upgraded health plan from a different insurer for a premium more affordable. But remember, if you choose to do so, you would lose out on the accumulated benefits and would have to start fresh. This would also mean re-starting the waiting period for the pre-exisiting diseases. You will also not be entitled to cumulative bonus if you buy a new policy.
Opt for Portability
This is a benefit given to consumers to transfer his or her policy from one insurer to another without losing out on the waiting period benefits. But if your current policy has just two years waiting period, and the new one has four years, you would have to wait for another two years to get the illness covered. Also, there may be limitations in transferring accumulated benefits and bonus when you port your Health Insurance policy.
But How Easy Or Hard Is Portability?
Although there are obvious advantages of portability as you don’t lose out on no-claim bonus and waiting period benefits, it is not as easy as it seems.
Few Drawbacks Of Portability
-You can opt for portability only at the time of renewal
-Accumulated bonus transfer depends on the provisions of the new policy
-Pre-existing diseases may be subjected to fresh under-writing
-Additional benefits on the new policy may come at a cost of higher premium
-Portability can happen with similar products only. Significant policy changes are not possible in portability
Hence, make sure you think wisely when your health policy is withdrawn by the insurance provider.
The writer is CEO, BankBazaar.com.
BankBazaarInsurance.com, India’s premier online marketplace to compare and apply for the best personal finance products including health insurance, car insurance, life insurance and two wheeler insurance.