Term Insurance Portability: Meaning, Eligibility, and How to Switch Insurers

Insurance portability sounds reassuring. The idea that you can move your policy to another provider if service levels drop or features no longer suit you feels empowering. This assumption largely comes from health insurance, where portability is a defined, regulated right. With term insurance, however, the rules work very differently - and that difference often catches policyholders off guard. 

Term insurance portability is one of the most misunderstood topics in protection planning. Many policyholders only discover the reality when they try to “transfer” their plan and realise the process isn’t as simple as they had imagined. This article explains how insurance portability works, what term insurance portability actually means in India, and how switching a term insurance policy to other insurers works without risking your family’s financial safety net. 

What Is Term Insurance Portability? 

Portability in insurance generally refers to the ability to move an existing policy from one provider to another while retaining benefits such as waiting periods or accumulated advantages. This concept applies clearly to health insurance. 

In the context of term insurance, portability does not work in the same way. A term plan does not carry forward benefits, premiums, or underwriting history to a new provider. What people often call “term insurance portability” is actually the act of discontinuing an existing policy and purchasing a fresh term plan from a different insurance service provider, subject to new underwriting. 

Is Term Insurance Portable in India? 

From a regulatory standpoint, term insurance is not portable in India in the traditional sense. The Insurance Regulatory and Development Authority of India (IRDAI) has not defined any mechanism that allows policyholders to transfer a term policy from one company to another. 

This means you cannot move your existing term policy’s premium rate, medical assessment, or policy tenure to a new insurer. Each term insurance plan is an independent contract. When you switch, the new policy is issued as if you are a first-time applicant, evaluated based on your current age, health profile, occupation, and lifestyle. 

That said, policyholders are not locked in forever. Switching is possible, but it requires careful planning to avoid coverage gaps or adverse underwriting outcomes. 

Eligibility and Conditions for Switching Term Insurance 

Anyone can apply for a new term insurance policy, but whether switching makes sense depends on timing and personal circumstances. Age plays a significant role, as premiums increase with each passing year. Health status matters even more. A condition that developed after your original policy was issued may lead to higher premiums, exclusions, or even rejection. 

Underwriting standards also vary across insurers. What was accepted earlier may now be assessed differently. This is why understanding the eligibility for term insurance before switching is essential. 

Policyholders usually consider switching if they are early in the policy term, remain in good health, or feel the current plan lacks features such as payout flexibility or service transparency. 

How to Switch Term Insurance Plans 

Switching term insurance involves a sequence of deliberate steps rather than a direct transfer. 

• Start by researching and selecting a new term plan that aligns with your coverage needs and long-term goals.  
• Apply for the new policy while keeping your existing one active. This overlap is critical as it ensures your family remains protected if the new application faces delays or rejection. 
• Once you apply, the new insurer will conduct underwriting. This may include medical tests, income verification, and lifestyle disclosures. 
• The policy is then approved and issued. 
• Review the policy document carefully to confirm the sum assured, tenure, exclusions, and premium structure. 

Only after the new policy is active should you consider surrendering or discontinuing the old one. Cancelling prematurely can leave you uninsured, even if briefly - a risk that must be avoided. 

Things to Consider Before Switching Term Insurance 

Switching term insurance should never be an impulsive decision. Premium differences are often the first trigger, but cheaper premiums may come with stricter underwriting or exclusions. 

Also consider the impact of your current health status and whether disclosures made earlier still apply. A mismatch in disclosures can later lead to complications during claims, including the risk of claim rejection. 

On the subject of claim rejection, you must also consider Section 45 of the Insurance Act of 1938 (amended in 2015). As per this law, an insurance claim cannot be denied on any grounds, if the policy has been in force for three years. If a policyholder switches insurers at any point, the three-year clock resets. This means, if a claim arises after you switch, there is a risk of contestation. The clock also resets on the suicide clause – which means life insurance cannot be claimed for death by suicide in the first year of the new policy. 

Evaluate the claims settlement ratio, reputation, policy wording, and customer support quality of the new insurer. Term insurance is a long-term promise, not a short-term product swap. 

Conclusion 

Term insurance portability in India does not function as a transfer of an existing policy. What it allows, instead, is the flexibility to reassess your protection and move to a new plan through a fresh purchase, provided you meet underwriting norms. 

When approached thoughtfully, switching can improve alignment with your financial goals. The key lies in understanding the rules, maintaining continuous cover, and making informed comparisons before taking action. Explore your options carefully before choosing your next life insurance plan. 

Frequently Asked Questions 

1. Can I port my term insurance policy to another insurer? 

No. Term insurance cannot be ported in the way health insurance can. You must purchase a new policy from another insurer and discontinue the old one only after the new plan is issued. 

2. Will switching term insurance affect my premium? 

Yes. Premiums are recalculated based on your age and health at the time of the new application. Even a few years’ difference can lead to higher costs. 

3. Is it safe to cancel an old term plan before buying a new one? 

No. Let there be an insurance overlap. Always wait until the new policy is issued. Cancelling early can leave you uninsured if the new application is delayed or declined.