Health Insurance Porting: The Hidden No-Claim Bonus Trap You Must Know

Health Insurance Porting: With your health insurance renewal approaching, chances are you’ve received offers to port your policy for lower premiums or better features. If you’ve had a bad experience with your current insurer or are facing a premium hike, porting might seem like a smart move. But here’s where many policyholders stumble—the no-claim bonus (NCB) transfer is not as seamless as it appears.

Porting Ensures Continuity—but With Limits

When you port your health insurance, certain continuity benefits carry forward. For instance, if you’ve already served part of your waiting period for pre-existing diseases (PEDs), that duration gets credited to your new policy. So, if your old policy had a three-year PED waiting period and you’ve completed two years, the new insurer will require you to serve only one more year.

Additionally, the five-year moratorium period, after which insurers cannot deny claims citing non-disclosure of PEDs, continues uninterrupted when you port.

However, the no-claim bonus (NCB)—which boosts your sum insured as a reward for claim-free years—follows a different set of rules. This is where policyholders often get caught off guard.

The No-Claim Bonus Porting Trap

While porting offers continuity on the base sum insured (SI), the NCB does not automatically carry over beyond that amount unless handled correctly. Here’s how it works:

Let’s say your current policy has:

• Base Sum Insured: ₹7 lakh
• No-Claim Bonus: ₹3 lakh
• Total Coverage: ₹10 lakh

If you port to a new policy with a ₹15 lakh base sum insured, the continuity benefits apply only up to ₹10 lakh. The additional ₹5 lakh will attract a fresh waiting period under the new insurer’s rules.

Scenario One: The Misunderstanding

Mr. A had a health insurance policy with:

• Base SI: ₹10 lakh
• NCB: ₹10 lakh
• Total Coverage: ₹20 lakh

Believing that his NCB would transfer fully, he opted for a ₹10 lakh base SI in the new policy. But to his surprise, his coverage was limited to ₹10 lakh in the first year. The insurer informed him that the NCB would start accruing again post-renewal but would be subject to a fresh waiting period.

Lesson: NCB does not port automatically unless the base sum insured in the new policy equals the total SI (base + NCB) of the old policy.

Scenario Two: Smart Porting Strategy

In another case, Mr. A opted for a ₹20 lakh base SI in the new policy—matching the total SI of his previous policy (₹10 lakh base + ₹10 lakh NCB). This time, the continuity benefits applied fully up to ₹20 lakh, ensuring seamless coverage.

However, had Mr. A chosen a ₹25 lakh base SI, only ₹20 lakh would have received continuity benefits. The extra ₹5 lakh would attract a fresh waiting period.

Key Takeaways for Policyholders

1. Porting Health Insurance ensures waiting period continuity, but only up to your previous base SI + NCB.
2. If you want to maintain your no-claim bonus benefits without waiting periods, you must match the base sum insured in the new policy to the total insured amount (base + NCB) of the old policy.
3. Any increment in base SI beyond this level will attract fresh waiting periods.
4. NCB accrued in the new policy will follow the new insurer’s waiting period rules, even after porting.
5. Always ask for a detailed portability benefit illustration before switching insurers.

Conclusion

Health insurance porting can offer better premiums and features, but understanding how no-claim bonus (NCB) continuity works is crucial. Avoid making hasty decisions based on offers and ensure you’re not compromising on coverage due to hidden portability rules. Before porting, always clarify how the sum insured and NCB will be handled to safeguard yourself from unexpected waiting periods.

Also Read: The Hidden Health Insurance Risk After 60