Renewing insurance policies and paying premiums on time are two tasks a policyholder has to undertake. These days insurance companies send reminders via e-mails and text messages to insured persons well in time in order to avoid lapse. When it comes to health insurance, failure to renew the policy can prove to be a very costly mistake. In India, in case you fail to renew your health insurance, your policy becomes redundant, with the insured losing out on following benefits.
1) Waiting period
- This is the 30-90 day period after buying a health insurance policy
- In this period, the insurance company does not offer you a cover
- There may be further waiting period for certain diseases/procedures, which could vary between three months and two years
- In case of lapse, the insured, while buying a new policy will have to go through the waiting period, once again
2) No-claim bonus
- Health insurance companies reward individuals for each year they make no claim in
- The bonus thus given is added to the sum assured. It typically ranges between 10 and 50 per cent of the sum insured.
3) Pre-existing illness
- In case of pre-existing diseases, insurers typically wait for 3-4 years
- When a policy is started again after a lapse, fresh medical tests need to be done
- If these tests throw up new findings other than the declared, the premium computed is higher
- Age and medical history are two of the main factors that determine one's premium amount
- With increase in age, premiums too rise
- In such a scenario, it is very likely that the cost of a new policy may be higher for the same sum assured as the previous policy
- On the other hand, if the applicant's medical history is clear, then there will be no loading (enhanced premium)
- Given these dire consequences, insurance regulator IRDA has come up with a bailout option:
Enter, Grace Period!
- Generally the insurance company offers a 30-day window (grace period) in case you have failed to renew the policy
- One does not lose any of the benefits if the premium is paid during the grace period
- The only catch: hospitalisation during grace period is not covered
Bottomline: Lapse in health insurance is a lose-lose situation for the individual. Hence, it is advisable to renew one's health insurance at least 10-15 days ahead of the date of expiry, to enjoy all the continuity benefits an insurer offers.
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