These changes were included in the guidelines on standardisation in health insurance released by IRDAI on January 1, 2020, with respect to the Standard Definitions for 42 commonly used terms in health insurance policies as defined under Guidelines on Standardization in Health Insurance.
IRDAI said, “The definition of ‘Portability’ and ‘Migration’ shall be applicable in respect of all health insurance products (both Individual and Group) filed immediately after the date of issuance of this circular.”
Here is a look at the new definitions and what they mean for policyholders.
In 2011, IRDAI issued a circular regarding guidelines on portability of health insurance policies. Here, it stated the definition of portability as: “Portability means the right accorded to an individual health insurance policyholder (including family cover) to transfer the credit gained by the insured for pre-existing conditions and time bound exclusions if the policyholder chooses to switch from one insurer to another insurer or from one plan to another plan of the same insurer, provided the previous policy has been maintained without any break.”
The latest definition (i.e., January 2), has removed the ‘break in policy’ clause. Break in policy clause “occurs when the premium due on a given policy is not paid on or before the premium renewal date or within 30 days thereof” as per the earlier guidelines.
Here is the latest definition: “Portability” means, the right accorded to individual health insurance policyholders (including all members under family cover), to transfer the credit gained for pre-existing conditions and time-bound exclusions, from one insurer to another insurer, as per the circular.
What it means for you
For the policyholder, what this means even if you have had deferred or missed your premium payments (as per the clause) with your existing insurer, you can still port your health insurance policy to a different insurer easily.
Amit Chhabra, Head- Health Insurance, Policybazaar.com said, “By allowing policyholder with a break in policy if a policyholder has a break in their existing health insurance policy, that is, the policy has expired and the policyholder hasn’t paid the premium, now as per the new definition, they can still port to a new policy.” he said.
On the other hand, the latest definition of Migration means, “the right accorded to health insurance policyholders (including all members under family cover and members of group health insurance policy), to transfer the credit gained for pre-existing conditions and time-bound exclusions, with the same insurer,” as per the circular.
Gurdeep Singh Batra, Head – Retail Underwriting, Bajaj Allianz General Insurance said that the guideline provides clarity on how one can migrate from group policy to an individual policy, underwriting guidelines for insurer and waiting period applicable. “An interesting point about these guidelines is that, it will be beneficial for customers who are migrating from one individual policy to another individual policy for the same sum insured as medical underwriting may not be required,” he added.
These two definitions will be especially beneficial for those policyholders who were not able to decide or port their health insurance and move to another policy, when they have already served waiting period for PEDs in their existing health insurance policy, especially when they were affected by the break in policy clause in their existing health insurance policy.