IRDA portability rules allow an individual to convert the group insurance cover offered by an employer to an individual policy from the same insurer. During the 6th Bangalore DIY investor meet (July 31st 2016), Mr. Srinivasan Sundarajan pointed out that he had made such a switch. When I requested him to recount his experience, pros and cons of converting a group cover to an individual health cover, he readily agreed. Over to him.
Switching Group Insurance to Individual Insurance – My experiences
Well, there comes a time in our career, when most of us decide to switch out of an organization. Many of us would have lived with the comfort that our organization took care of the risks – a group insurance policy for life, health.
Now when I step out of that comfort, what happens? More so when I decided to get out of the corporate world. This meant that there’s no new employer with a group insurance policy so to speak.
Well, I had been thinking for a while about stepping out of the corporate world. I had done my enquiries about the portability of my group insurance quite in advance. I got the confirmation, that it was possible to port it out when I leave the organization.
I had the cover for me, my wife and kids. In addition, the group insurance scheme allowed me to cover my mother, which I had opted for.
About two years before I left, the company had introduced an ability to increase the coverage, by paying an additional premium. I had availed of the same for my mother and my family. [Don’t get me wrong, my mother is an integral part of my family, as I see, but for the insurer and my company I guess it is different!!]
I initiated the porting through my HR organization. The process had to be initiated 45 days before the D-Day. I got connected to the officer in the insurance company, who was handling my company. He was a very able and helpful person. He gave me the options and the premium I had to pay for the various sum assured amount.
The first thing I found – I could have the cover for my family, at the level, I had in the corporate. There were no issues. The only thing is that the premium for an individual policy is definitely higher than the group cover.
Here is what I found next – I could not retain the full cover for my mother. The individual policy had a cap of 3 Lakhs. So I had to downgrade my mother’s cover from 10 Lakhs to 3 Lakhs! She’s a senior citizen, so I have to now live with the reduced cover. So the learning from this –
“If you can cover your parents with a super top-up outside, before they become old, please do so. You can still avail the base cover from your corporate. This way you can optimise your premium and also avoid having to reduce the coverage at their old age.”
As far as pre-existing ailments, there was no issue (not that it made any impact in our case). When the insurer issued my family floater policy and my mother’s policy, he marked the date when I was first insured over 10 years prior to that. So that took care of the IRDA 4 year rule for anything. This also meant there was no additional loading of any sort.
As far as no-claims are concerned, well there was nothing I could do about it.
The other thing I did was to ensure that I got my personal cover initiated about a week prior to my departure from the organization. After all, the whole purpose of insurance was to cover a risk, and I did not want to be in a situation where there was a gap between the expiry of my group cover and the start of my personal cover. This is the other recommendation I have for those of you who are planning to switch out – Have a small overlap rather than a gap, to avoid Murphy’s Law!
Please note, that this was my personal experience. I am not going to state that this is how every insurer will work. I will share in another blog, my experience after I had my individual policy in another blog…
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Please join me in thanking Mr. Srinivasan for his kind generosity.
Now over to you. What are your impressions about switching corporate group cover to an individual policy from the same insurer?
Read more: : Health Insurance Portability: What you need to know before porting
Thanks Pattu for this post. Very helpful. If all insurers allow similar porting it will really help.
Mr. Srinivasan would it be ok with you if you could share the premium rates too. This will give an understanding as to how much difference we can expect. With group policy the premiums are very less. I too will explore this option when I quit.
Thanks,
Rakesh
Unfortunately, it looks like they don't.
My observations:
This is not a clear example of porting. This is an example where the Insurance Co has been able able to convert a person covered under their group plan seamlessly into getting a separate family floater.
Under porting rules the insurer has to insure you at least up to the sum insured under the old policy. As the cover for your mother had to be reduced this is not porting.
http://www.policyholder.gov.in/portability_of_health_insurance.aspx
I have tried speaking to various General Insurance Companies into porting group insurance into individual policies but have never been able to do it.
Pattu has been kind enough to clear the issue by refering to Point 10.2 in the link sent by him
https://dtf.in/wp-content/files/Circular_dated_09.09.2011_-_Re._Health_Insurance_Portability.pdf
Porting from Group Policy to Individual Policy of the same Company is mandated by law. But as this is not know by most people the Companies are not giving the benefit of porting. Thanks Pattu and Mr Srinivasan to get this issue highlighted.
Also as per porting rules Mr Srinivasan you would be in the right to demand to know why the cover for your mother was reduced.
Rakesh:
I cannot give the full picture on the premium rate for one important reason. I would really not know how much my company paid for a group cover. During my discussion with the development officer in the insurance company, he did say that it will be a lot cheaper for a group insurance (and given my employer's size - they probably would have had a very attractive rate).
Instead, if I could recommend, I would say, just check with the same insurance company, like any other walk-in customer - how much would they charge you... That way you know what will have to pay should you decide to go on your own policy.
OK, the Development officer was good enough to explain why he could not do it. He said that for senior citizens that was the maximum sum assured they were having under any individual policy. It was not that he refusing in the classic sense, but there was no product that was available in the non-group insurance that could provide the same.
Thanks Sundararajan, will check when the time comes. I did check with the TPA and they said to contact HR. So I guess will have to wait.
Is buying personal health insurance for parents useful if i already have enough cover from office ? Concern is , lets say after 6 to 8 years down the line if employer not providing insurance OR coverage is very less as in above case, I may need this personal insurance, But i see that most personal insurance will cover maximum 3 years only , for renewal any way i have to pay premium at fresh market rate for that age, so no benefit there. Only advantage i get is pre-existing disease (waiting period) which is ~ 3 to 4 years. With this can i say that its optimum to buy personal health insurance for 3 to 4 years before you switch from insured job to un - insured job(self employed) ? Please clarify