Portability of health policies

A health insurance policyholder unhappy with their insurer used to face an unpleasant choice: stay put, or switch and start the clock again on waiting periods and no-claim history. Portability removes that trade-off.

Under portability, the workbook says, the benefits of no-claim, bonus and time-bound exclusions for existing conditions can be transferred when the insured switches insurer. The new insurer has to honour the record the policyholder built up with the old one, rather than treating them as a fresh customer with fresh exclusions.

There is exactly 1 condition attached in the workbook: to benefit from portability, the previous policy should have been maintained without a break. A lapse in the old policy — even briefly — puts the accumulated benefits at risk.

This sits alongside a related IRDAI requirement the same chapter names: all general and health insurers must now offer a standard individual health insurance product, with common policy wordings across the industry, and one of its stated objectives is precisely "to facilitate seamless portability among insurers." A standardised product design is what makes comparing and transferring the specific benefits — no-claim bonus level, waiting periods already served — a like-for-like exercise between insurers.

Illustrative figures. Mrs Nair has held a health policy with Insurer A for 6 years without a break, has built up a no-claim bonus taking her sum insured from Rs 10,00,000 to Rs 16,00,000, and has already served the 4-year waiting period on a pre-existing condition.

She switches to Insurer B using portability. Because her old policy ran continuously with no gap, Insurer B has to carry forward her Rs 16,00,000 enhanced sum insured and recognise that her pre-existing-condition waiting period is already served, rather than starting her again from a Rs 10,00,000 base with a fresh waiting period.

Had she instead let the Insurer A policy lapse for even a month before applying to Insurer B, she would lose the right to port these benefits and would effectively be a new health insurance customer.

Chapter 3 (Features of non-Life Insurance Products), section 3.1.2(b), covers portability as a feature of health insurance alongside the standard individual health product mandate. Expect a question on the single condition attached to portability — continuous cover on the previous policy — and on what benefits actually transfer (no-claim, bonus, time-bound exclusions).

• Continuity of the old policy is the only condition the workbook states. A common wrong answer adds conditions such as a minimum policy term or insurer approval that the workbook does not require.
• Portability transfers no-claim bonus, bonus and time-bound exclusion credit — not the exact premium or product features of the old policy, which the new insurer still prices and designs on its own terms.
• A break in the old policy, however short, forfeits the right to port — do not assume a short gap is tolerated.
• Portability is distinct from the standard individual health product mandate, though the two work together — the standard product's common wordings are what make comparing ported benefits practical.