Grace Period in Health Insurance
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What is the 'Grace Period’ in Health Insurance?
The exact duration of the grace period typically depends on the insurance company and the type of health insurance plan. It is also optional for every health insurance policy to offer a grace period for premium payment.
The Role of Grace Period in Medical Insurance
The health insurance grace period is quite different from that of other insurance plans. This period can range from a few hours to about a month. Some insurers may not offer any grace period as it is subject to their discretion to provide this benefit.
Let’s assume that the due date of renewal for your health insurance plan is December 31 every year. If the policy offers a grace period of 15 days, you can make the payment by January 15 of the subsequent year and retain your policy. The policy expires on January 15, and you cannot renew the same after this date. You must purchase a new policy if you need health insurance coverage.
Thus, it is essential for policyholders to examine and compare the grace period offered by health insurance plans before purchasing. A reasonable allowance ensures that the policy is not cancelled if the premium payment is delayed due to any reason.
Difference Between Grace Period and Waiting Period
The medical insurance grace period is different from its waiting period. The grace period is the extra time available for policyholders after the due date for premium payment. The policy can be renewed within the grace period and not beyond.
However, the waiting period in health insurance refers to the time that you have to wait in order to file a claim in respect of any medical treatment or procedure. The waiting period is generally applicable for health conditions present at the time of purchasing the policy. These are known as pre-existing diseases.
For example, if the waiting period is six months for heart ailments, the insurance coverage for the same will start only six months from the date of purchasing the policy.
Impact of Grace Period on Your Health Insurance
Many policyholders miss the deadline for renewing the policy and end up losing insurance benefits. The health policy grace period provides an option for such policyholders to pay the premium after the due date. This ensures that the insurance coverage remains intact despite a delay in the payment of premiums.
In the absence of a grace period, any emergency medical claim can be rejected even if there is a single day’s delay in premium payment. This is because the insurer can cancel the policy on the due date for non-payment of premiums. The policyholder has no other option but to purchase a new policy, possibly at a higher premium and new terms & conditions.
Most insurance companies accept any claim filed during the grace period for emergency medical treatment. Claims in respect of non-emergency healthcare services are typically not entertained by insurers.
Drawbacks of Renewing Health Insurance After the Due Date
Despite the availability of a grace period in medical insurance, it is always advisable to pay the premiums well before the due date. Renewing the policy after the due date has its own disadvantages, as listed below:
Lack of Insurance Coverage
Insurers do not offer the wider benefits of medical insurance for claims filed during the grace period. Except for some emergency services, other claims are generally not accepted by insurance companies. Lack of insurance protection is the biggest drawback of not renewing the policy on time.
Possibility of Rejection
The insurance provider may reject your request to renew the policy after the due date. You may be forced to buy a new policy at higher premiums or new terms.
Loss of Accumulated Benefits
If the policy lapses, you may end up losing certain accumulated benefits, such as the no-claim bonus in health insurance policy and waiting period credits. This can result in higher premiums and longer waiting periods when you purchase a new policy.
Loss of Covered Waiting Period
Apart from pre-existing diseases, other covers, such as critical illness, dental health coverage, etc., are also lost when your policy expires. You may have to start from scratch to regain these benefits.
Late Fees & Penalties
Some insurance companies levy a late payment fee for missing the due date. They may also charge higher premiums to policyholders who are not regular with premium payments.
Things to Remember While Renewing Your Health Insurance Policy
It is important to consider the following aspects while renewing your health insurance policy.
Reassessment of Needs
The existing sum insured amount may not be sufficient due to rising medical expenses and your health condition. There may be a new addition to your family, or your children may no longer be dependent on you. Do not forget to disclose any new disease or illness in the family to the insurer.
Check the Renewal Terms
The insurance company intimates the policyholder about the renewal at least 45 days before the due date. Please examine the basic details such as the policy type, sum insured, validity period, benefits claimed, etc. Notify the insurance company immediately if you find any discrepancy in the policy details.
Consider Other Options
There may be better products available in the market that offer lower premiums, better coverage, or superior customer service. With health insurance portability, you can switch to another company without losing your existing policy benefits.
Renew On Time
Never delay your health insurance policy renewal. Please renew it well before the due date to avoid needless hassles. The policy expires if the premium is not paid within the grace period, and you will have no insurance coverage.
Frequently Asked Questions on Grace Period
Most insurers offer a grace period of around 15 days after the due date for paying the premium and renewing your health insurance policy. You have to make the payment within this period.
No. The grace period in health insurance offers sufficient time to policyholders who have missed the due date of renewal. The policy shall then lapse, and you must buy a new policy if you want health insurance coverage.
No. There is no provision for automatic renewal of your medical insurance policy. It has to be renewed every year on or before the specified due date.
The medical insurance grace period keeps the policy active for some time after the due date. However, most insurers do not accept claims filed during the grace period. Some of them may accept only emergency treatment claims and reject all others.
Yes. The health insurance policy shall lapse if you do not renew it within the grace period. Once the policy lapses, waiting period benefits will be lost and you will have to start afresh in the new policy.
Disclaimer:
Grace period in health insurance may have limitations, exclusions, and other terms and conditions that may affect coverage. It is important to carefully review the policy wording before making any decision.