No matter how strong your body may be, life remains unpredictable. You cannot foresee illness or unexpected hospital visits, which can happen to anyone. A medical diagnosis might require urgent surgery, which causes stress for you and your family. However, securing your family with health insurance coverage provides financial security in such situations. But if you forget to renew your health insurance plan or cannot renew it before it is due, medical expenses can weaken you financially more than you imagine.
We shall learn more about insurance policy lapses and explore things to do when you discover your policy has lapsed.
What is a Policy Lapse?
Health insurance policies are valid till a designated period. They require timely renewal by paying the premium for the following term. If you fail to renew health coverage within the specified due date, the insurer normally grants a grace period of 15-30 days.
You can still enjoy the benefits of the policy during this grace period. However, if you exceed the grace period, your policy will lapse and be deemed null and void.
What happens following a Policy Lapse?
After your health insurance policy lapses, you can no longer enjoy the benefits outlined in the policy agreement. Therefore, you must cover all medical expenses from your savings unless you have a secondary health plan as a backup.
Trying to revive a lapsed policy may result in losing the benefit of your unused No Claim Bonus (NCB). The valuable discounts resulting from years of no claim will go in vain and will no longer be available.
Policy lapse also means going through the waiting period from the start. Every policy includes a waiting period for specific diseases. If you wait for a particular time for the first time, policy lapse will cause an equal or longer waiting period.
What Should You Do When Your Health Insurance Lapses?
When you realize you have missed the health insurance renewal deadline and exceeded the associated grace period, you can get in touch with the insurance provider for policy revival.
If they feel convinced that the reason behind the lapse is legitimate and not sheer negligence, they may approach your cause a bit leniently.
However, the insurers reserve the right to reject your request. They will evaluate your request based on your current health conditions, ability to pay the premium, intent to do so, settlement of dues, fines, and other parameters.
Most insurance companies provide a revival window of six months from the date of policy lapse, during which they ensure no foul play is involved. Health conditions or financial stability changes may result in an increased premium and customized terms and conditions.
You always have the option to apply for a new policy. Considering the premium and penalties for the lapse of the existing policy, the revival process can be costlier than purchasing a new one altogether.
When buying a new insurance product, you may get enhanced benefits at a more affordable price from a different insurer. However, it is essential to consider the benefits, like the No Claim Bonus (NCB), from the lapsed policy.
How can you prevent Policy Lapse?
- The deadline for renewing a health insurance policy isn’t necessarily the next premium due date. Most policies provide a grace period. They allow policyholders extra time beyond the premium deadline to maintain the policy. It is called the “Grace Period”.
- If you cannot remember the renewal date, you can configure your bank settings for automatic mode. Doing this will make the payment automatically from your bank account without a hassle.
- You can also choose a multi-year plan. For example, with a five-year policy, health insurance renewal is only required after five years. This process eliminates the need for yearly renewals.
- The option of automatic ECS is also a good alternative. With ECS, the premium will be automatically debited from your bank account on or before the applicable date of renewal.
- Multiple insurance companies have partnered with various banks to enhance your convenience. In such instances, you can pay the premium and renew your health insurance plan or through the ATMs of these banks. It saves you time and money and prevents the risk of policy lapse.
- Technology can help health insurance renewal online. You can simply use your phone to renew health coverage by payment through online banking, phone banking, mobile apps, etc., with just a click of a button.
Reviving Health Insurance Plan
You can renew health coverage for your lapsed policy by settling the overdue premium and interest. Certain situations may require you to undergo one or more health checkups. The following methods show how you can revive your lapsed policy.
- Ordinary: If you want to revive your policy within six months after the lapse date, you need no health checkup. Simply pay the outstanding premium along with the interest. The interest is calculated based on the policy’s inception date.
- Non-Medical Grounds: If you go by non-medical grounds to revive your policy, the revived amount will be less than the original one
- Medical Grounds: If you are unsuccessful in both regular revival and revival on non-medical grounds, you can revive a health insurance plan on medical grounds. In this case, a medical examination will determine the revival amount.
Conclusion:
The best way to prevent policy lapse is to embrace technology for health insurance renewal online.