Find out more about the grace period in health insurance and plan your payments accordingly
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The grace period in health insurance is an additional period of time beyond the due date. During this, policyholders can make the premium payment if they have missed doing so. However, failure to pay the premium within this period will automatically cause a policy lapse. This means that you will cease to receive its benefits. Learn more about this concept in the following sections.
Important Update (Dated May 30, 2024) – Good news for Health Insurance policyholders! According to the Master Circular on Health Insurance Business 29052024 rolled out on May 29, 2024 by IRDAI, insurers are to decide on the request for cashless claims within 1 hour of receiving the request. Also, the final claim is to be granted within 3 hours after the policyholder’s discharge from the hospital. Insurers have been directed by IRDAI to establish necessary systems and procedures for this process by July 31, 2024.
The Master Circular on Health Insurance Business 29052024 circular is available here - https://irdai.gov.in/document-detail?documentId=4942918
Let’s take up an example to better understand the grace period in health insurance. Assume that you possess a health insurance policy whose due date for premium payment is on the 5th of every month. The grace period offered by your insurance provider is typically 15 days from the due date.
Assume that due to unforeseen circumstances you missed paying the premium within the 5th of a month. Since you have a 15-day grace period for health insurance renewal, you can make the premium payment within the 20th of the month. This will ensure that your policy remains active.
When it comes to the grace period for renewal of health insurance, there are quite a few features that you should be aware of. Here’s a quick look at what they are:
The grace period offered on a health insurance policy can be anywhere from 15 days to 30 days. However, this depends on the insurance provider you opt for.
You continue to receive health insurance coverage even when you’re in the grace period.
By paying the insurance premium within the grace period, you can keep your insurance policy active.
Not paying the insurance premium within the grace period will lead to a policy lapse. This will require you to apply for a new health insurance plan.
The waiting period in health insurance and the grace period for a health insurance policy are unrelated. The grace period is nothing but an extension of time beyond the due date for premium payment.
On the other hand, the waiting period is the time that you would have to wait before you’re allowed to raise a health insurance claim. During this period, none of the claims will be entertained by your insurer. This is even if the claim is for a disease covered by the insurance. Only upon the expiry of this period will the insurer accept health insurance claims.
The grace period of a health insurance policy is essentially a relaxation that’s offered by insurance providers. Even if you’ve missed the due date for premium payment, you can still keep your policy active. This can be done by paying the renewal premium within the grace period applicable to your policy.
Paying your health insurance premiums on time is critical. Failing to do so can have disastrous consequences. Let’s take a look at a few of the disadvantages of not renewing your health insurance on time.
1. Policy Lapse
Non-payment of the health insurance premium within the grace period will automatically lead to a policy lapse. In such a case, you will immediately cease to receive any insurance coverage and will lose all the benefits listed under the plan.
2. Inability to Renew the Policy
If your policy has lapsed due to non-payment of the requisite premium, insurance providers may prevent you from renewal. All the accrued benefits on the policy up until the lapse will be lost. You will then be required to avail a new health insurance plan at a much higher premium.
3. Loss of Coverage for Pre-Existing Diseases
When you purchase a new health insurance plan to replace a lapsed one, you would be considered as a new customer. This will not only cause you to lose coverage for pre-existing diseases, but you will also have to go through the waiting period once again. Until the waiting period on the new insurance policy is over, you will not be able to make any claims whatsoever.
Even though you can save your health insurance from lapsing by paying your premium during the grace period, it comes at a cost. Insurance providers often levy a penalty in the form of a late fee when you miss your due date for premium payment.
Therefore, when you pay your premium when the grace period is active, you will be charged an amount that’s higher than your normal premium payment. This higher premium that you’re required to pay includes the regular premium payment amount and the late fee penalty.
If you don’t make the premium payment within the grace period, your insurance provider will cancel your health insurance policy. This will not only lead you to lose insurance coverage but all the accrued benefits as well. These include the No Claim Bonus, among others.
Although you may still opt to purchase a new health insurance policy, many insurers may refuse to offer coverage due to your payment history. Since you would also lose the waiting period benefit, you will have to go through the waiting period once again. This also means subjecting yourself to medical tests again.
Your coverage stays intact and active even when you’re in the grace period of a health insurance policy. This effectively means that you can still raise a claim for covering expenses related to a health emergency during the grace period.
However, this claim will be accepted by your insurance provider only if you’ve paid the renewal premium before the expiry of the grace period. If you fail to make the payment before the expiry of the grace period, your policy will lapse and your insurer has the right to refuse the claim.
The grace period in health insurance is a very useful feature. It can keep you protected during situations when you’re unable to make the premium payment on time before the stipulated due date.
However, it is advisable to not wait till the grace period in health insurance gets activated. Instead, always make your premium payments on or before the original due date. This will prevent unnecessary hassles and ensure that you continue to receive coverage.
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FAQs on Grace Period in Health Insurance
What is the duration of the grace period in health insurance?
Usually, the grace period for a health insurance policy is 15 days from the due date of payment. There are a few insurance providers that offer a grace period of up to 30 days from the due date as well.
Do I have to pay any penalty for making the premium payment during the grace period for a health insurance policy?
Yes. Most providers will levy a late payment fee over the regular health insurance premium when you make the payment during the grace period.
Do I still get insurance coverage benefits during the grace period of a health insurance policy?
Yes. You will continue to receive insurance coverage benefits even when you’re in the grace period of a health insurance policy. However, any claims you make during this period will be entertained only if you’ve paid the renewal premium before the expiry of the grace period.
How can I find out what the grace period in my health insurance policy is?
Reading through your policy documents is the best way to find out what the grace period for your health insurance is. Alternatively, you can also get in touch with your insurance provider to get more clarity on this.
What is the grace period for health insurance renewal?
The grace period for health insurance renewal differs from one insurer to another and is usually capped at 30 days from the due date. However, it is advised to check the grace period applicable to your health plan.
