Policy porting: 90% of customers have a sum insured of less than 5 lakh

NEW DELHI: Given the rising cost of healthcare amid a fresh surge in covid-19 cases, more and more people in India are looking to port their existing health insurance policies having low sum insured.

According to a Policybazaar study, as much as 90% of policyholders looking to port their medical insurance policies during the past few weeks had a cover of less than ₹5 lakh.

According to the online insurance marketplace, ₹10 lakh to ₹1 crore is the preferred sum insured that customers are looking for. The data also showed that 20% of policyholders are porting after one-two years of buying a policy, 30% after three-four years and 50% after more than four years.

Moreover, 55% of the customers porting had a room rent cap or a co-pay in their policy. Co-payment or co-pay means a cost-sharing requirement that provides that the policyholder will bear a specified percentage of the amount of the admissible claims. Moreover, the cap on room rent means that insurer will pay a fixed percentage of the daily room rent.

“There are two reasons for policyholders looking to port. First, historically, policies that have been sold have a sum insured of up to ₹5 lakh. Second, people are finding that their current policy is insufficient, and as a result I want to port to a better or bigger policy," said Amit Chhabra, head-health Insurance, Policybazaar.com.

According to the Insurance Regulatory and Development Authority of India (Irdai), when policyholders change their health insurance policy from one insurance company to another, they don’t have to lose the accumulated benefits. “Premium pricing wise, the difference between ₹10 lakh and ₹1 crore is not very large, so most people prefer to go for a higher sum insured plans while porting," he added.

A lot of older policies had a capping such as room rent or co-payment terms. These things have become obsolete as none of the newer policies have these restrictions.

Individuals porting policies must fully understand policy features and benefits and they should compare the plans of different companies. Also, policyholders should properly mention any pre-existing disease or any treatment a person is undergoing in the declaration form.

Source: Live Mint