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Grace Peroid in Health Insurance

Understand the importance of the grace period in health insurance. Know how it affects the renewal of a policy.

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Health insurance has become an indispensable part of a financial plan for most people today. Mainly, it is due to the rise in healthcare costs, which can be tough to meet with your savings alone. Considering its importance in life, you must be familiar with certain aspects, such as the grace period in health insurance.

Let's discuss how it works and why it is important for you. 

What is Grace Period Related to Health Insurance Plans? 

Each health insurance policy has a predetermined tenure, after which it needs to be renewed at a specific date. The policy's renewal date is when you pay a particular amount to ensure that the coverage is continued.

The grace period in health insurance is the time given by insurers after the renewal date to the policyholders in case they miss paying the premium on time.

There may be several situations when the policyholders fail to renew the policy at the designated date. Hence, insurers offer a grace period in health insurance as extra time for the policyholder's benefit. They can keep their policy intact, even if they cannot meet the deadline for the payment.

During the grace period in health insurance, the policyholder can avail of the plan's benefits without any changes as  the coverage continues until the end of the medical insurance grace period. 

How Does Grace Period Work for Health Plans?

The grace period for renewal of a mediclaim policy is typically 15-30 days. However, it is best to confirm with the insurer about it to avoid any misunderstandings. The duration of the grace period in health insurance may vary depending on the insurer and policy type.


However, if you fail to pay the premium amount within the grace period for renewal of health insurance, the policy may lapse. To avoid the hassle of selecting a policy all over again, it is imperative to renew the policy before or within the grace period in health insurance. 

Let's take an example to understand how the grace period in health insurance works.

  • Mr. Ahuja's health insurance expires on 5th September, but he misses the due date of payment due to personal reasons
  • His insurer offers a 30day grace period in health insurance
  • His plan will not terminate till 5th October, and he can pay the renewal amount till then
  • But, if he does not renew the policy by this extended date, he will lose health coverage

More About Renewing Health Insurance Plans During Grace Period 

It is crucial to know about the grace period in health insurance when securing coverage for yourself or your family members. If you end up forgetting the renewal date due to negligence, it can cause unnecessary complications. Moreover, the need for health coverage is becoming more pressing with time.

We live in a world full of uncertainties, and the purpose of health insurance is to protect against any unforeseen health crisis. The unfortunate reality is that we may never know when a medical emergency occurs. Therefore, taking a chance with your medical insurance can be heavy on your pocket.

There are guidelines[1] regarding the grace period of health insurance by IRDAI. Regardless of whether you have made claims during the policy term, you need to renew the policy within the grace period in health insurance.

Another notable point is that you, as the policyholder, have to stay on top of the policy's important dates. The insurer may send you a notice for the renewal date or information about the grace period in health insurance. 

Drawbacks of Not Renewing Health Insurance on Time

When you purchase health insurance, you calculate premium & adequate coverage required and fulfil other conditions needed. As you reach the end of the policy tenure, you can enjoy the same benefits by renewing before or within the grace period in health insurance. 

Ultimately, the renewal of health insurance is imperative if you wish to enjoy extended coverage. By now, you may understand the importance of the grace period in health insurance for renewal.

1. No Coverage Benefits 

If you do not pay the renewal premium during the medical insurance grace period, you lose coverage until renewal is done. Post the grace period in health insurance, any claims towards the policy is considered invalid.

When you purchase health insurance, you calculate premium & adequate coverage required and fulfil other conditions needed. As you reach the end of the policy tenure, you can enjoy the same benefits by renewing before or within the grace period in health insurance. 

Ultimately, the renewal of health insurance is imperative if you wish to enjoy extended coverage. By now, you may understand the importance of the grace period in health insurance for renewal.

1. No Coverage Benefits 

If you do not pay the renewal premium during the medical insurance grace period, you lose coverage until renewal is done. Post the grace period in health insurance, any claims towards the policy is considered invalid.

 

2. Waiting Period

You may have to restart your plan if you do not renew the policy within the grace period in health insurance. Doing so will initiate a waiting period for the new plan before you can make any claims. You may also miss out on any continuity benefits by not renewing the policy on time.

3. Loss of Pre-Existing Coverage

You may lose coverage for pre-existing medical conditions if you miss the renewal date of your policy. Since you will become a new customer, you will have to go through a waiting period as per the terms of the policy.

4. Loss of No Claim Bonus

There is a no claim bonus offered to the policyholder if they pass the policy term without making any claims. In case you do not renew the health policy within the grace period in health insurance, you may miss out on it too.

5. Higher Cost of Renewal 

A significant drawback of not renewing within the grace period in health insurance is the higher cost. If the policy ends up terminated, you may have to buy a new plan with no discounts or continued benefits from the last one. Furthermore, the price of covering your health increases with time due to the rise in healthcare costs.

6. Renewal May Be Denied

In case you end up purchasing a new plan because you missed the grace period in health insurance, the risk of application rejection also increases. Purchasing a health plan requires you to go through a medical examination to estimate the coverage. Therefore, if you have developed a medical condition, the premiums may be higher for the new policy.

Difference Between Waiting and Grace Period

You may be confused between the waiting period and grace period in health insurance. But, they are two very different features of your health plan. A health insurance plan is customized according to the medical requirements of the insured. 

The waiting period in health insurance is when you cannot make any claims to avail of the benefits. In general, the duration of the waiting period may last for 3-4 years. It is much longer than the grace period in health insurance. 

Depending on the medical conditions covered in the policy, the waiting period may differ. Once this period is over, the insured gets coverage and can make claims for it.

On the other hand, the grace period in health insurance is for the renewal of the policy. It applies to the whole health insurance plan and not certain critical illnesses. The grace period for renewal of mediclaim policy can last anywhere between  15 to 30 days, depending on the insurer and plan type. 

The waiting period in health insurance is when you cannot make any claims to avail of the benefits. In general, the duration of the waiting period may last for 3-4 years. It is much longer than the grace period in health insurance. 

Depending on the medical conditions covered in the policy, the waiting period may differ. Once this period is over, the insured gets coverage and can make claims for it.

On the other hand, the grace period in health insurance is for the renewal of the policy. It applies to the whole health insurance plan and not certain critical illnesses. The grace period for renewal of mediclaim policy can last anywhere between  15 to 30 days, depending on the insurer and plan type. 

 

Frequently Asked Questions (FAQs)

Q. Can I Renew the Policy if I have made Claims During the Preceding Policy Years? 

A. According to the guidelines by IRDAI, renewal of policy cannot be denied on the grounds of claim or claims made during the preceding policy years.

Q. When can the Renewal of Health Insurance Be Denied?

A. In general, the renewal of health insurance is possible except on the grounds of fraud, moral hazard, and misrepresentation by the insured person.

Q. Do I Receive Reminders for Renewal of Health Insurance?

A. The insurance provider may endeavour to send a notice for the renewal date of health insurance, but they are not obligated for the same.

Q. Are There any Penalties for Payment during Grace Period in Health Insurance?

A. You may incur extra charges if you miss the renewal due date and pay the premium within the grace period for renewal of health insurance.

Q. What will happen In case I cannot Renew My Plan Within The Grace Period Of Health Insurance? 

A. In case you fail to pay health insurance premium within the grace period for renewal of mediclaim policy, you lose coverage, and the plan may lapse. You will not be eligible for a no-claim bonus if you buy a new health plan. Also, the cost of purchasing another health plan may be higher than before.

Sources:

[1] https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4157&flag=1

https://www.policyholder.gov.in/uploads/CEDocuments/Renewability%20of%20Health%20Ins.pdf

https://www.policyholder.gov.in/Renewability_of_Health_Insurance.aspx

ARN No : Nov21/Bg/12A

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