Understanding Term Insurance Portability

IndiaFirst Life
• 15 Apr, 2025

Buying a term insurance plan is one of the best ways to secure your family’s future. A term plan ensures that your loved ones have the support they need in your absence. When you buy a term plan and pay premiums at the right time, the plan stays active till the end of the tenure or until a death benefit claim is raised.

While this seems like an ideal scenario, you may want to change things if you are not satisfied with the current insurer. For instance, they may not offer sufficient coverage or provide reliable customer service. At this point, you may want to check if another insurer offers better term insurance coverage. In such cases, term insurance portability can help.

What is Term Insurance Portability?

It is a concept where you can transfer your insurance policy from one insurer to another. In term insurance portability, your insurance coverage remains consistent and there is no cancellation. The coverage is simply shifted from one insurance company to another.

Let’s understand term plan portability better through an example:

Miss Nandini buys a ₹2 crore term insurance policy with XYZ company. However, after two years, she realises that another insurer, ABC, is offering the same coverage at a lower rate. What’s more, ABC has solid customer service too. She decides to make the switch and carries out the formalities as required. Once the process is complete, her ₹2 crore insurance coverage is ported to ABC insurance company. She has received better rates and customer service without cancelling her previous policy.

Is Term Insurance Portability Allowed in India?

Term insurance portability is not yet allowed in India. Hence, porting your term insurance plan from one to the next is not possible in the current insurance scenario.

Presently, only health insurance policies can be ported from one insurer to the next. So, if you are not satisfied with your term insurance plan, you do not have the option of porting it. You can cancel or surrender it. However, this may lead to cancellation or surrender charges.

Why Individuals Want Term Insurance Portability?

Having a portable term life insurance plan can be a boon in many cases. There are multiple situations in which term insurance portability can come to the rescue:

Dissatisfaction with Current Insurer

Porting your policy is the ideal alternative if you are not happy with the current insurer. With portability, you do not have to worry about cancellation or surrender charges.
Change in Financial Goals

Sometimes, your goals may take such a turn that another insurer may be the right option. Another insurer may offer an add-on that perfectly suits your future plans. Here, having a portable term life insurance can ease things.
Budget Preferences

You may come across another insurer that is offering the same coverage as you currently have but at a lower rate. However, if you cancel your current plan and opt for a new one, the cancellation charges may nullify any savings received with the new plan. If term insurance policy portability were possible, it may make the switch more cost-effective.

Alternatives for Porting Term Insurance

As term plan portability is not allowed yet, you can consider the following alternatives if you want to change your coverage:

Buy a New Policy

You can opt for a new plan while retaining the old one. This way, you can enjoy the term insurance benefits from both insurers. However, you must consider the various costs before doing so.
Modify Existing Coverage

You can opt for additional coverage in the form of add-ons or riders with your current plan. Or you can remove any unnecessary coverage during renewal. This will make your plan more budget-friendly, and you will not have to opt for term insurance portability.
Surrender Your Existing Plan

Another option is to cancel or surrender your existing plan. Make sure to consider the various pros and cons of doing so before you decide. Ensure that you are not left without a life cover for longer than necessary. Use tools like the term insurance calculator to make cost-effective decisions.

Conclusion

Term insurance policy portability can be a great help in various situations. Along with helping policyholders, it can also create healthy competition amongst insurers as each insurer will try to retain its customer base. This can lead to better features and competitive pricing which can ultimately help increase insurance penetration in the country.

While there is no option for a portable term life insurance plan at the moment, some speculate that it may be a possibility in the coming years. Until then, you can consider various alternatives mentioned above to ensure a smooth term insurance journey.

by IndiaFirst Life
Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 754.37 crore, is one of the fastest growing private life insurers in India in terms of New Business IRP in Fiscal 2023. Our key differentiators are our simple, easy-to-understand products that are optimally priced. As of Sept 30, 2023, we offered 30 retail products, 13 group products along with six riders (across retail and group portfolios), along with policies under the PMJJBY scheme, catering to protection, savings, health and retirement needs of our customers, leveraging multiple distribution capabilities and augmenting various investment options. In all propositions under the categories of Participating Plans, Non-Participating Savings Plans, Non-Participating Protection Plans, Unit Linked Insurance Plans, Group Protection Plans, Corporate Funds Plans, Riders & PMJJBY form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and optimally priced with a developed comprehensive risk management framework/policy.