Insurance Porting : All You Need to Know Before Switching Policies

Marketopedia / Personal Finance / Insurance Porting : All You Need to Know Before Switching Policies
  1. Porting

When you decide that your insurance is no longer suitable, you have the option to either purchase a new plan or transfer your current policy.

To the layperson, this may be a shock, but there is an important variation between them. An entirely new policy opens a new chapter for those involved, as mentioned in the beginning. Do you have a long-standing health issue? You will have to wait three years before submitting a claim. Have cataracts that you would like to treat? Wait two years. 

Unfortunately, if you want to make a claim within 20 days of purchasing the policy, more time must pass.

It’s annoying when you’ve followed all the requirements of your existing insurer, and yet they require the same paperwork again if you want to switch policies. Having consistently met the conditions for three years, it’s almost bizarre that this is expected. Unfortunate indeed.

When porting a policy, individuals will often take advantage of the benefits their previous insurer offered. This is a common choice among those looking to switch insurance providers.

Let’s take an example. A man has had diabetes for nearly 10 years and has held a policy with them for 5 of those. His previous insurer imposed long waiting periods; 3 years for diabetes, 2 years for certain illnesses, and 30 days for non-accidental hospitalisations. When he ports to another policy that requires these waiting periods again, he can declare that he’s already done so. That way, he won’t need to go through the wait any more.

That’s it, the new insurer will provide coverage for all possible issues from the start unless the agreement explicitly states otherwise.

While it is important to keep in mind a few factors, you cannot transfer a policy whenever desired. There is usually a 45-60-day window for policy renewal that should be taken into account when settling for a new insurer. Also, the inclusion of waiting periods in the coverage cannot be bypassed just because someone vouches for you.

It is up to you to back this up with supporting documents. To get the pre-existing illness waiting period waived, you need to present proof that you have held your previous policy for at least two years. 

In order to have the three-year wait time period waived, you will need to provide evidence of holding the prior policy for a three-year duration and clearly expressing pre-existing conditions. It’s not plausible to expect the insurer to waive waiting periods if it is a recent illness detection. The reference to the disease must be specified on the policy paper, and that is what counts.

If you have held a policy with a sum insured of Rs. 5 lakhs (no Bonus included) and are now porting to something with a greater coverage– say Rs. 10 lakhs, then the waiting periods will only be waived off for the first 5 lakhs. 

To explain further, any ailments emerging from day one will be compensated up to Rs. 5 lakhs without any waiting period. When an expense exceeds this amount, the insurer would reimburse the initial Rs. 5 lakhs and then decide whether they are responsible for the remainder or if any waiting periods apply to it.

It’s wise to think about porting when you’re purchasing a new policy; it’s usually the more prudent option.

Verdict: Not a Gimmick


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