An insured should renew their health insurance policy in time i.e. on or before the due date. It is important to keep an eye on the renewal date of a health insurance policy. If you miss out on the renewal date, then the grace period is a savior.
Insurers provide an extended time frame for policy renewal if you miss out on the due date to renew the policy, such extended duration for the renewal period for a health insurance policy is called the grace period.
Insurers provide a grace period of 7 to 15 days depending upon the terms of the policy, provided that the premium payment will be made within the stipulated time period. The policyholder will not get insurance protection during the grace period. The coverage will start, once the payment is been made.
Policy portability is not possible in the case of the grace period. The insured cannot switch the insurer when he is been provided a grace period for policy renewal.
After the tenure of the grace period, if no payment is made, the policy lapses. After that no policy benefits such as coverage of the waiting period for pre-existing diseases, the no-claim bonus will be provided to the insured.
Why is a timely renewal of health insurance policy important?
No-Claim Bonus (NCB):
Experience of a claim-free year and renewal of policy on time provides a chance to avail of no-claim bonus benefit to the insured. No-claim bonus adds up to a specific percentage of the sum insured. Some insurer also provides a discount on renewal premium amount in the case of NCB.
Coverage of the Waiting period:
If the health insurance policy is lapsed due to non-payment, you have to buy a fresh health insurance policy by following the whole process again which leads to nullifying the continuation benefit. All waiting period will be applicable afresh and you have to wait again for the coverage of pre-existing diseases or other specific diseases.
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Policy portability:
Since policy portability is not possible after the due date of renewal so it is important to keep yourself aware of the renewal date of health insurance in order to seek the benefits which can be availed by switching the insurer.
Always keep a reminder of the due date of policy renewal so that you do not regret the loss of continuation benefits.
Case Study:
Rahul has purchased a health insurance plan in 2015. The health insurance plan has a waiting period of 3 years for coverage of pre-existing diseases and 2 years waiting period for specific disease coverage. The policy offers a 10% no-claim bonus for every claim-free year.
Rahul renewed the policy on time for two years but failed to renew the policy in 2018. He did not even make the payment within the grace period of 15 days provided by the insurer. He missed out on the renewal date and even the stipulated time of grace period.
Unfortunately, his health insurance plan lapsed and all the policy continuation benefits ended. All the benefits which he has earned by staying and renewing the insurance policy for the tenure of two years are forgone.
In such a case, Rahul purchased a fresh health insurance plan. Again he has to wait for 3 years to get coverage for pre-existing disease.
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If he would have renewed the policy on time, all the continuation benefits would have been provided to him.
Hence, It is good to have a health insurance plan for the long haul rather than purchasing a new health plan every year or after a short tenure of two or three years. Timely renewal of health insurance plans is a must. Because insurer always appreciates the timely renewal of policy in terms of value-added benefits such as no-claim bonus, free health check-ups, or various other discounts.