With the Covid 19 still lurking on your shoulders and heavily breathing on our necks, health insurance is surely something that one wants to ignore or even delay. So, if you had been contemplating a health insurance plan, you can consider the group health plans offered by your bank.
Group Insurance is not just offered by your employers only however even banks can offer a group health insurance plan to all its account holders and most private and public sector banks do offer the facility of group health insurance schemes for their account holders.
These schemes are usually for a specific coverage and not as customizable as an individual health insurance plan would be, but the premiums are definitely cheaper and often have pre-existing coverage from day one. This is what makes a group health plan offered by a bank very attractive. There is also a tax benefit under section 80 D for the premium paid.
For the last few years, banks had been allowed to partner with 3 insurance companies in the life, general and health insurance sectors respectively. So, there are multiple insurance partners for all bank account holders to opt for the group health insurance plan.
Recently, the Insurance Regulatory and Development Authority of India (IRDAI) introduced the concept of portability in such group health insurance schemes offered by banks. This is good news for account holders as the facility of porting would allow them to choose between the available plans offered by various insurers partnered with the same bank. But, before delving into the latest guidelines issued by IRDAI in this context, let’s have a look at some of the common features of such group health insurance schemes –
Features of group health insurance plans offered by banks
The group health insurance plans offered by public and private sector banks have the following salient features –
- The coverage is usually fixed by the insurance company. In some cases, the customers might also be allowed the choice of the sum insured from the options available only
- The premium of the policy needs to be paid by you, i.e. the account holder for which you can claim an income tax deduction under section 80D
- The coverage is available only for the existing account holders of the bank and you can enjoy coverage for as long as you hold an active account with the bank
- The premium rates are quite low as compared to individual health plans
- Coverage can be extended for dependents too at an additional premium
- Pre-existing conditions are, usually, covered from the first day itself without any waiting period. However, some plans might have a waiting period which is usually low
- There is no pre-policy medical check up, as it is usually based on a declaration of good health
Now, after the new change in regulation, what’s in it for the account holders?
The new IRDAI regulation
In a circular dated 7th October 2020, IRDAI allowed the benefit of portability in group health insurance schemes offered by banks. In its guidelines, IRDAI has stated that account holders can choose to change the insurance company of the group health insurance policy which they hold with their bank.
This portability benefit, however, is subject to the following terms and conditions –
- You can port or change your existing health insurance plan to another insurer only if the insurer offers a group health insurance policy to the customers of the same bank.
- Porting is allowed between indemnity oriented health insurance plans only.
What are indemnity health insurance plans?
Indemnity plans are those which cover the actual medical costs suffered.
So, if you are covered under an indemnity oriented group health insurance scheme provided through your bank, you can port to another indemnity oriented health insurance scheme with the same bank but with another insurer.
The porting of the policy would be voluntary on part of the account holder. Porting would be allowed only if the policyholder sends an application to the bank and/or the insurance company to port the existing policy
Porting is allowed only at the time of renewal. You would have to submit a porting request at least 30-45 days prior to the renewal date of the policy.
Since these guidelines have come into effect immediately and you can choose to port your existing group health insurance policy if it comes up for renewal.
Time for good news for bank group health customers?
Yes. The new guidelines stated by IRDAI have made group health schemes offered by banks more attractive for account holders. Now, account holders can choose a suitable insurance plan offered by another insurer if they are dissatisfied with their current coverage or their service. This porting is free of cost and gives policyholders a choice in the policy that they can buy so that their coverage doesn’t cease. Also this change might give an impetus to the health insurance penetration in India so that more people can avail the coverage without having to worry about continuity.
By Dhirendra Mahyavanshi, Co-Founder, Turtlemint ( An InsurTech Company)