A failure to renew health insurance means a lose-lose situation for individuals, depriving them of continuity benefits, and leading to higher premiums.
Photo: Images Bazaar
Jinsy Mathew
Mar 23, 2016,
Updated Mar 28, 2016, 6:00 PM IST
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
4) Premium
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.