Hi Sanjib, I took health insurance for my parents (father 64 and mother 61 and its renewed continuously for 6 years but now the insurance provider has increased the premium by 40%. My father has diabetes for the past 6 years and mother has BP for 10 years. I checked in the market, other insurance providers premiums are significantly lower than my current provider. Is it good to port my current plan to another service provider or stay with the current provider? please advise
Ans: Sanjib, I understand your concern about the significant increase in the health insurance premium for your parents. A 40% hike is substantial, especially when managing finances for retired or aging parents. Your father, aged 64, has diabetes, and your mother, aged 61, has been managing high blood pressure for a decade. Health insurance is crucial for them, and choosing the right provider is essential.
Evaluating Your Current Health Insurance
Long-term Relationship
You have maintained the current health insurance for six years, which is commendable. This continuity provides benefits like reduced waiting periods for pre-existing conditions.
Health Conditions
Considering your parents' medical history, including diabetes and hypertension, it's crucial to have a comprehensive policy that covers these conditions without excessive restrictions or exclusions.
Increased Premium
The 40% increase in premium can strain your budget. Evaluating the reasons behind this hike is necessary. Insurers often raise premiums due to increased claims or changes in their underwriting policy.
Exploring the Option to Port Insurance
Portability Rules
Health insurance portability allows you to switch insurers without losing benefits like waiting periods for pre-existing conditions. This is regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
Comparing New Providers
While other insurers offer lower premiums, it's essential to compare the coverage, benefits, and exclusions. A lower premium might come with reduced benefits or higher co-payments.
Pre-existing Conditions
Ensure the new provider covers diabetes and hypertension without new waiting periods. Confirm this before making any switch.
Benefits of Staying with the Current Provider
Accumulated Benefits
Staying with the current insurer means continuing to benefit from the accumulated waiting period, which might be fully exhausted for some conditions by now.
Policy Continuity
Continuity ensures your parents do not face new waiting periods or exclusions, which can be a risk when switching insurers.
Trusted Provider
If you are satisfied with the current insurer’s claim settlement process and customer service, it might be worth staying despite the higher premium.
Benefits of Porting to a New Provider
Cost Savings
Lower premiums with a new provider can offer immediate financial relief. This is particularly important if the premium hike strains your budget.
Potential Better Benefits
Some new policies might offer better or more comprehensive coverage, even at a lower premium. Evaluate the policy details carefully.
Healthy Competition
Porting can help you take advantage of competitive offers in the market. New insurers might offer attractive features to gain new customers.
Important Factors to Consider
Coverage and Benefits
Compare the coverage limits, room rent caps, and critical illness coverage of the current and new policies. Ensure the new policy matches or exceeds your current coverage.
Exclusions and Waiting Periods
Check the exclusions and waiting periods for pre-existing conditions with the new insurer. Ensure there are no hidden clauses that can affect future claims.
Network Hospitals
Ensure the new insurer has a robust network of hospitals in your area. Cashless treatment at preferred hospitals is a significant advantage.
Claim Settlement Ratio
Evaluate the claim settlement ratio of the new insurer. A higher ratio indicates better reliability and a smoother claims process.
Steps to Port Health Insurance
Research and Compare
Use online comparison tools to evaluate different health insurance policies. Look for reviews and ratings from existing policyholders.
Apply for Portability
Initiate the portability process at least 45 days before your current policy renewal date. This gives enough time to complete the process without a coverage lapse.
Submit Documents
Provide the necessary documents, including the previous policy details, claim history, and medical records. Complete all required forms accurately.
Wait for Approval
The new insurer will review your application and may request a medical check-up. Approval can take a few weeks, so plan accordingly.
Renew and Pay Premium
Once approved, pay the premium for the new policy. Ensure there is no coverage gap during the transition period.
Case Study: Porting vs. Staying
Let's consider a hypothetical example to illustrate the decision-making process.
Case Study: Staying with the Current Provider
Mr. Kumar, aged 65, with diabetes, and Mrs. Kumar, aged 62, with hypertension, have been with their current insurer for eight years. Their annual premium increased by 35%. They decided to stay because:
The current insurer covers their pre-existing conditions with no waiting period.
Claim settlements have been smooth, with timely reimbursements.
They value the peace of mind and continuity of coverage.
Case Study: Porting to a New Provider
Mr. Reddy, aged 63, with heart disease, and Mrs. Reddy, aged 60, with diabetes, faced a 40% premium hike. They decided to port because:
The new insurer offered a 25% lower premium with similar coverage.
The new policy had a lower co-payment for chronic conditions.
The new provider had a better hospital network in their city.
Long-term Considerations
Health Deterioration
As your parents age, their health may decline, leading to more frequent claims. Ensure the insurer has a good track record with senior citizens.
Financial Planning
Consider the long-term affordability of the premium. Opt for a policy that provides sustainable coverage without becoming a financial burden.
Emergency Coverage
Ensure the policy covers emergencies and offers cashless hospitalization in reputed hospitals. This reduces out-of-pocket expenses during critical times.
Conclusion
Porting your health insurance can offer financial benefits, but it requires careful evaluation. Compare the benefits, exclusions, and waiting periods of both current and new policies. Consider the long-term implications for your parents' health coverage. Staying with a trusted provider has its advantages, especially with pre-existing conditions. However, porting can provide cost savings and better benefits if chosen wisely. Regularly reviewing your policy and staying informed about market options ensures the best coverage for your parents.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
