Stick with your insurer even if medical policy is withdrawn

Moving to a new company means losing out on continuity benefits

Policyholders could be left in the lurch when insurance companies discontinue their plans. Policies are withdrawn either because of changes in regulations or introduction of new policy schemes by insurers. Recently, the Insurance Regulatory and Development Authority of India (Irdai) banned life insurance companies from selling indemnity-based health insurance products.

Almost all life insurance companies — HDFC Life Insurance, Reliance Life Insurance and IndiaFirst Life Insurance — have indemnity mediclaim plans wherein the policyholders are reimbursed according to the hospital bills. The insurers will now have to withdraw these plans. “Existing policyholders, however, will continue to enjoy the benefits of the policy till the end of the term,” says R M Vishakha, MD & CEO, IndiaFirst Life Insurance.

Many policyholders may worry that they would face problems with servicing as the insurers will no longer focus on health product. “They shouldn’t have any such apprehensions, as rules clearly specify the way forward and the regulator has a strong grievance redressal system,” says Mahavir Chopra, director — health, life and strategic initiatives, Coverfox.com.

A policyholder may lose benefits if he was to discontinue the existing policy and buy a new one. The customer, for example, may need to wait for four years until any pre-existing illnesses are covered. Also, there will be a loss of no-claim bonus. Those over 40 would need to go for a health check-up and may be subjected to a loading on the premium if the insurance company detects any potential health problems. Those who are below 40 can still look at schemes from general insurance companies. “For long term, it is better to be with a company that has a focus on the health space and is growing its network and business,” says Chopra. The regulations, at present, don’t allow porting of health insurance form life insurers to general insurers.

There are also times when general insurance companies discontinue their health insurance products and introduce new ones. In such cases, the insurer would give a customer at least three months to shift to a new policy. According to Irdai’s latest guidelines, such companies need to either offer a product that is as good as the one withdrawn or better than that. But if the new product has more features it also means higher premiums.

“Even in such a case, it is always better to take the new plan that the company is offering,” says Yashish Dahiya, CEO and co-founder, PolicyBazaar.com. Discontinuing policy may mean losing out on continuity benefits. If the customer faces any problems with the new plan, he can opt for policy portability till 45 days before the expiry. “Remember, only 48 per cent of the customers manage to port. For those who have pre-existing diseases, porting is as good as buying a new health insurance policy.”

If you think that premiums are too high, you can always ask the existing insurer to reduce your sum insured to keep the premium same. Such customers can buy top-up insurance to increase their sum insured.

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