Unlike some of the other insurance policies around, a Health Plan usually comes with fixed renewal tenure, usually spanning across a year. Moreover, the insurers handling the health plans are quite strict when it comes to policy renewal which needs to be initiated at least 8 days before the expiry date arrives. That said, there are times when the insured misses the renewal window for some reason, which eventually terminates the health insurance plan, almost immediately. While intricacies like these can be avoided by purchasing long-term plans which require the insured to pay multiple premiums at once, there are chances that even a long-term health plan lapses due to the lack of due diligence on the part of the insured.
In the subsequent sections, we shall try to understand the concept of insurance lapse and the steps which need to be adhered to, if and when the policy gets terminated.
How a Health Insurance Policy Lapses?
The concept behind a policy lapse is simple yet frustrating. If the insured fails to pay the premium or the renewal amount before the expiry date, the policy gets terminated and the person isn’t eligible for medical coverage, in case of a health plan. This is when the insurer isn’t eligible to pay anything as cover, despite the insured paying all the premiums up till the expiration point.
What is a Grace Period?
The health insurance lapse grace period is a tentative date before which the insured can revive the lapsed policy, even if the renewal date is missed in the first place. A majority of health plans offer a 30-day window as the grace period, before which the policy can be reinstated. However, policy renewals during the grace period mean that the insured isn’t eligible for medical coverage during this timeframe. Moreover, even the no claim bonus, promised in addition to the sum assured, is discontinued in most cases.
Although the health insurance lapse grace period offers some time to the insured for renewing or reviving the policy, it is always advisable to avoid getting into a similar situation. Firstly, even if the health insurance is in the grace period, the insurance company isn’t eligible to offer any sort of coverage, regardless of the diagnosed ailments. Moreover, there is a sense of emptiness and fear when the policy is pushed into the grace zone. The worst-case scenario for someone whose policy is in the grace period is that plan portability is no longer an option, even if there is another insurance company that is offering a better set of benefits. The reason behind this is that any portability request needs to be raised almost 45 to 60 days before policy expiration and not after it lapses.
Renewing a policy is important even if it’s done during the grace period. However, reviving a lapsed health insurance policy during the grace period minimizes the scope of coverage, kills off the lifelong renewability option, dissolves the waiting period continuity perks, and even negates the no claim bonuses associated with an action plan. Therefore, it is advisable to stay vigilant, keep checking for the renewal period, and even turn on the automatic renewal scheme for avoiding hassles.