Key Limitations and Disadvantages of Health Insurance Portability You Should Know

Policyholders covered under individual or family floater health insurance plans have the right to switch their insurer at the time of policy renewal. They can do so while retaining certain accumulated benefits. This right, governed by the Insurance Regulatory and Development Authority of India (IRDAI), is commonly referred to as health insurance portability. 

Under the IRDAI Master Circular on Health Insurance Business (May 2024) and the IRDAI (Insurance Products) Regulations, 2024, the portability framework has been standardized and made more transparent. This helps encourage fair competition and protect policyholder interests.

Health insurance portability offers a genuine avenue to access 

• better coverage
• improved service
• more competitive premiums

Still, it comes with several limitations. These potential disadvantages of health insurance portability are important for policyholders to understand clearly before initiating a switch. Decisions made without adequate information can result in higher costs, gaps in coverage, or loss of certain accumulated benefits.

Table Of Content

• Understanding Health Insurance Portability in India
• Key regulatory updates by Insurance Regulatory and Development Authority of India
• Major disadvantages of health insurance portability
• Portability approval not guaranteed (underwriting risk)
• Premiums May increase after porting
• Partial transfer of waiting period benefits
• Limited flexibility in policy selection
• Possible loss or modification of existing benefits (NCB, wellness rewards, sub-limits)
• Strict timelines and procedural requirements
• Requirement of fresh medical tests
• Risk of coverage gap during transition
• Change in network hospitals and cashless access
• Limitations for group insurance policies
• Administrative complexity in documentation and coordination
• No assurance of better service quality after switching
• Moratorium period restart for enhanced sum insured
• Important factors to evaluate before opting for portability
• When health insurance portability may not be advisable
• Summary
• FAQs

Understanding Health Insurance Portability in India

As discussed, health insurance portability refers to the ability to transfer an existing health insurance policy from one insurer to another. It can be from one plan to another within the same insurer (termed ‘migration’), without losing continuity benefits earned under the previous policy. 

The continuity benefits that transfer under portability include:

• Credit for waiting periods already completed for pre-existing diseases (PEDs) and time-bound exclusions
• Continuity of the moratorium period (now reduced to 60 continuous months under the 2024 regulations, from the earlier 96 months)
• Transfer of No-Claim Bonus (NCB), subject to the new insurer’s policy terms
• Sum insured continuity to the extent of the previous policy

Key Regulatory Updates Relevant to Portability

Regulatory Aspect	Current Rule
PED Waiting Period (Maximum)	36 months (reduced from 48 months)
Moratorium Period	60 continuous months, including portability/migration credits
Portability Application Window	At least 45 days before policy renewal date
New Insurer Decision Timeline	Within 15 days of receiving complete documents
Existing Insurer Data Sharing	Within 7 working days via IRDAI’s IIB portal
Portability Fee	No additional charge permitted for the act of porting
Entry Age Limit	Removed; no insurer can deny coverage solely on age grounds
Eligible Policy Types	All individual indemnity-based policies, including family floaters; excludes Personal Accident and Travel policies

Major Disadvantages of Health Insurance Portability

The following disadvantages of health insurance portability are relevant to Indian policyholders considering the option: 

1. Portability Approval Is Not Guaranteed

One of the most significant disadvantages of health insurance portability is that the new insurer is not obligated to accept every application. While IRDAI regulations empower policyholders to apply for portability, the new insurer retains the right to conduct its own underwriting assessment before accepting the request.

Factors that influence an insurer’s underwriting decision include:

• Age of the policyholder and family members
• Medical history, including existing chronic conditions
• Claims record under the previous policy
• Lifestyle risk factors such as smoking or pre-existing ailments

It is worth noting that individuals with 

• multiple pre-existing conditions or 
• a history of frequent claims 

are more likely to face a modified acceptance or, in some cases, rejection. 

Senior citizens often face stricter underwriting. If the new insurer rejects the application, the policyholder must renew with the existing insurer. Care should be taken that the renewal window has not lapsed.

2. Premiums May Increase After Porting

Many policyholders consider health insurance portability, expecting comparable or lower premiums, but premiums are determined independently by each insurer based on their own risk pricing models. The new insurer may assess the same individual at a different risk level, resulting in higher premiums.

Premium increases can result from:

• Advancing age at the time of porting (many insurers have age-based premium slabs)
• Medical inflation and revised actuarial pricing
• Prior claims history being factored into risk assessment
• Different underwriting philosophy of the new insurer
• Loading applied for specific health conditions discovered during fresh underwriting

It is worth noting that IRDAI’s 2024 regulations prohibit loading at the individual policy renewal level purely on account of claims experience. However, such protection may not fully apply when porting to a new insurer, as fresh underwriting terms apply.

3. Partial Transfer of Waiting Period Benefits

Health insurance portability allows the policyholder to carry forward credit for waiting periods already served, but only to the extent of the sum insured and benefits covered under the previous policy. Any increase in sum insured or addition of new benefits may attract fresh waiting periods.

For instance:

• If a policyholder has completed 2 out of 3 years of the pre-existing disease waiting period in the old policy, the new insurer must credit those 2 years. So, only 1 year of waiting period will remain.
• If the sum insured increases from ₹5 lakh to ₹10 lakh during portability, the additional ₹5 lakh may have a fresh waiting period of up to 36 months. This is as per rules from the Insurance Regulatory and Development Authority of India.
• Any benefits in the new policy that were not part of the old policy, such as new riders or specific disease covers, are treated as new additions. These may have their own waiting periods.
• The moratorium period continues without interruption. The 60-month continuous coverage clock carries forward from the original policy start date, as clarified in the IRDAI 2024 Master Circular on Health Insurance.

4. Limited Flexibility in Policy Selection

Health insurance portability is not a completely open marketplace switch. IRDAI regulations require the new policy to be comparable to the existing one in terms of coverage type. Policyholders cannot port from an indemnity-based individual policy to a benefit-based policy (such as a critical illness plan) using the portability route.

• Portability applies only to indemnity-based individual policies and family floater plans
• Personal Accident and Travel insurance policies are explicitly excluded from portability provisions
• Highly specialized plans or niche products may not accept portability requests if they differ significantly in structure from the existing plan

This is one of the disadvantages of health insurance portability that can reduce the range of products a policyholder can access through portability.

5. Possible Loss or Modification of Existing Benefits

Some benefits may change after health insurance portability. They may not transfer exactly as they were in the previous policy.

No-Claim Bonus (NCB)

Under recent rules from the Insurance Regulatory and Development Authority of India, the No-Claim Bonus can be taken either as an increase in sum insured or as a premium discount. The policyholder can choose the format. However, the new insurer may follow a different NCB structure. Because of this, the percentage or value transferred may change.

Loyalty and wellness benefits

These benefits are usually insurer-specific. Wellness rewards, loyalty discounts, and wellness program credits from the old insurer usually do not transfer to the new policy.

Sub-limits and co-payments

The new policy may have different limits on room rent, certain treatments, or AYUSH procedures. Co-payment requirements may also differ. This can affect how much of the hospital bill the insurer covers.

Room rent eligibility

Room rent limits can also change. If the new policy allows a lower room rent limit than the previous one, out-of-pocket costs during hospitalization may increase.

6. Strict Timelines and Procedural Requirements

The portability must follow specific timelines. As per guidelines from the IRDAI, the application must be submitted at least 45 days before the policy renewal date. Applying around 60 days earlier is usually safer.

Requirements include:

• The portability request must be submitted to the new insurer, not the current one.
• The existing insurer must share policy and claims details through the Insurance Information Bureau (IIB) portal within 7 working days.
• The new insurer must give its underwriting decision within 15 days after receiving all documents.

Common documents required include:

• Existing policy documents
• Claims history from the last 3–5 years
• Medical records
• Completed proposal form
• Identity and address proof

If the application deadline is missed, portability may not be processed for that renewal cycle. In such cases, the policyholder may need to renew the existing policy for another year.

7. Requirement of Fresh Medical Tests

New insurers may require the policyholder to undergo fresh medical examinations as part of their underwriting process. This is more common for:

• Policyholders above a certain age (typically 45 or 50 years, though this varies by insurer)
• Applications involving high sum insured amounts
• Cases with a prior medical history or frequent claims

The outcome of these tests can lead to exclusion of specific conditions, premium loading, or, in some cases, rejection. The cost of medical tests may be borne by the insurer or the applicant, depending on the insurer’s specific policy. It is important to note that IRDAI prohibits insurers from imposing any exclusive charge for the act of porting itself.

8. Risk of Coverage Gap

A coverage gap can occur if the health insurance portability process is not completed before the existing policy’s renewal date. If the new insurer’s underwriting is delayed or documents are not submitted in time, there may be a period during which neither the old nor the new policy is active.

Consequences of a coverage gap include:

• Any medical expenses or hospitalizations during this gap period would have to be paid entirely out-of-pocket
• The lapsed coverage may restart the waiting periods for pre-existing diseases and reset the moratorium period clock
• A break in coverage, even for a brief period, can undo years of accumulated continuity benefits

To mitigate this risk, policyholders are advised to initiate the portability process at least 45–60 days before the renewal date and confirm with both insurers that continuity is maintained.

9. Change in Network Hospitals

Each insurer maintains its own network of hospitals for cashless claim settlement. Switching insurers through health insurance portability means the policyholder will have to rely on the new insurer’s hospital network, which may not include preferred hospitals, specialist centers, or facilities currently covered under cashless arrangements.

• Preferred hospitals or specialist centers may fall outside the new insurer’s cashless network
• Coverage in smaller cities, towns, or semi-urban areas may be more limited with certain insurers
• Policyholders accustomed to specific multi-specialty hospitals should verify empanelment before porting

The ‘Cashless Everywhere’ initiative was launched in 2024 by the General Insurance Council. It allows policyholders to get cashless treatment even at non-network hospitals in some cases. However, the insurer must be informed in advance. Approval depends on the insurer’s discretion. Because of this, policyholders should still check the hospital network before hospitalization.

10. Limited Applicability to Group Insurance Policies

Portability can be more complex for employer-provided group health insurance plans. Guidelines from the Insurance Regulatory and Development Authority of India allow portability for group policies. However, the policy usually needs to be converted into an individual policy first. This process is called migration.

Migration may involve fresh underwriting. The coverage terms may also change during this process.

• Waiting periods and premiums under an individual plan are often different from those under a group policy
• Benefits such as maternity cover, OPD cover, or zero co-payment features available under group plans may not be available or may be priced significantly higher under individual plans
• The sum insured typically available under corporate plans may be lower than what a policyholder would need to individually port

Salaried individuals relying solely on employer-provided group insurance should be aware that portability from such a plan to an individual policy involves both migration and underwriting, rather than a direct one-step port.

11. Administrative Complexity

Health insurance portability involves multiple parties. The policyholder, the current insurer, and the new insurer must coordinate. As per guidelines from the Insurance Regulatory and Development Authority of India, the existing insurer must share policy and claims data through the IIB portal within 7 working days. Delays or data mismatches can slow the process.

Documentation requirements can also be extensive:

• Policy history
• Claims records
• Hospital discharge summaries
• Medical prescriptions

Incomplete or incorrect documents may delay processing or lead to rejection. The policyholder must also submit a fresh proposal form to the new insurer. All medical conditions must be disclosed clearly. Inaccurate disclosures can lead to claim disputes later.

12. No Assurance of Better Service Quality

Porting a health insurance policy does not guarantee better service. Insurers differ in their claim processes and service standards.

Some key factors to evaluate include:

• Claim settlement ratio
• Claim processing time
• Grievance resolution efficiency
• Cashless claim approval process

Annual data such as the Claim Settlement Ratio (CSR) and Incurred Claims Ratio (ICR) published by the Insurance Regulatory and Development Authority of India can provide useful insights. However, these numbers do not guarantee the outcome of an individual claim.

Service quality also depends on the insurer’s customer support, the efficiency of the Third Party Administrator (TPA), and available digital tools. Experiences shared by other policyholders may help, but they may not reflect every individual case.

13. Moratorium Period Restart for Enhanced Sum Insured

A subtler but important limitation involves the moratorium period rules when the sum insured is enhanced during health insurance portability. While the moratorium clock continues for the original sum insured, any increase in coverage restarts the 60-month moratorium period specifically for the enhanced amount.

For example, if a policyholder has held a ₹5 lakh policy for 4 years and ports to a ₹10 lakh policy, the original ₹5 lakh coverage retains 4 years of moratorium credit. However, the additional ₹5 lakh coverage begins a fresh 60-month moratorium clock. This means that for 5 more years, the enhanced portion remains contestable by the insurer on grounds of non-disclosure. Policyholders planning sum insured increases at the time of porting must be aware of this specific implication.

Important Factors to Evaluate Before Opting for Health Insurance Portability

Given the disadvantages of health insurance portability discussed above, it may be important for policyholders to conduct a detailed evaluation before initiating health insurance portability. The following checklist covers the key areas to assess:

Evaluation Factor	What to Check
Coverage Comparison	Sub-limits, exclusions, room rent caps, AYUSH coverage, and specific disease lists in both policies
Premium Affordability	Compare annual premiums after fresh underwriting; account for age-related increases over a 5–10 year horizon
Hospital Network	Verify that preferred hospitals, specialists, and nearby facilities are empanelled under the new insurer
Waiting Period Status	Understand which waiting periods transfer and which restart; especially relevant for ongoing or chronic conditions
Claim Settlement Ratio	Review the new insurer’s latest CSR published by IRDAI; also check ICR and grievance redressal data
NCB Structure	Assess how the new insurer structures NCB (cumulative bonus vs premium discount) and whether the existing NCB amount transfers
Moratorium Impact	If near the 60-month milestone, weigh the benefit of staying with the current insurer versus porting
Service Quality	Evaluate TPA efficiency, cashless approval timelines, and grievance resolution record

When Health Insurance Portability May Not Be Advisable

While health insurance portability can be a useful option under the right circumstances, there are specific situations where it may be more prudent to continue with the existing insurer.

• Approaching the 5-year (60-month) moratorium milestone: Porting before completing this milestone means continuing to be subject to non-disclosure contestability for the new insurer’s underwriting cycle on the new policy terms.
• Ongoing or recently diagnosed health condition: Porting at such a time could lead to higher premiums, exclusions, or rejection based on fresh underwriting.
• Nearing the end of a PED waiting period: Switching just before a pre-existing condition becomes covered is likely to reset or partially reset the waiting period for any additional coverage, leading to a longer wait for full coverage.
• Satisfied with existing service and cost: Porting purely for marginal savings may not justify the administrative effort and risk of loss of benefits.

Summary

Health insurance portability in India is a well-intentioned regulatory mechanism that provides policyholders the freedom to switch insurers without entirely forfeiting earned benefits. The IRDAI’s 2024 reforms have strengthened this framework significantly. It has reduced waiting periods, shortening the moratorium period, and mandating stricter timelines for insurer decisions.

At the same time, the disadvantages of health insurance portability are real. So, policyholders looking forward to health insurance portability should compare policies in detail. They must evaluate the new insurer’s claim settlement record and  verify network hospital coverage. Ideally consulting a licensed insurance advisor is the best approach.