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Continuity Benefit / No-Lapse Benefit

Continuity benefit in health insurance refers to the credit of the waiting period already served in the existing health insurance policy that a policyholder receives upon porting his policy to another insurer. In India, IRDAI mandates all health insurers to provide credit for accrued continuity benefits in waiting periods in all port cases. This benefit is offered to the extent of the base sum insured and accrued bonus, if any, in the existing policy. 

For example, you bought a health insurance policy from X insurance company 2 years back with a base sum insured of Rs. 10 Lakh. You got a 50% no-claim bonus upon the last renewal, which increased your coverage to Rs. 15 Lakh. This year, you port this policy to Y insurance company. You apply for a sum insured of Rs. 20 Lakh. The insurer accepts your proposal and extends a coverage of Rs. 20 Lakh. 

The new policy with Y company includes a waiting period of 3 years for pre-existing conditions. You get a continuity benefit for waiting period for PEDs served in the old policy which applicable on a sum insured of Rs. 15 Lakh. To this extent, the waiting period on pre-existing conditions is just 1 year. However, a 3 year waiting period on PEDs applies for the additional Rs. 5 Lakh sum insured.

Continuity benefit may also be referred to as no-lapse benefit.

 

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