What is Grace Period in Health Insurance Plans?

5 min read

The responsibilities of a person increase, as years pass by and especially, it is more when you decide to start your own family. You have to consider the requirements of your partner and other dependents in a family, and while doing so, you need to put more effort into ensuring their financial needs are protected and taken care of during emergencies. A health insurance policy is the perfect solution that offers financial security to protect yourself and your family against medical emergencies. But in order for this security to continue for a longer period of time, it is essential for you to renew the health policy before its expiry date. But, if it expires, policyholders are given a ‘grace period,’ within which the policy has to be renewed.

What is Grace period?

In health insurance, the Grace period refers to the additional time offered by the insurance company after the due date to pay the necessary premium is elapsed. In the event of not paying the premiums within the grace period, the policy shall become inactive.

The timeframe for the grace period is clearly stated in the terms and conditions of the health insurance policy document, which you need to read while signing the documentation. Most insurers offer 15 and 30 days as a grace period. In many cases, non-payment of premium shall lead to cancellation of the grace period, which must be avoided at all costs as it is a useful feature and losing it will make the policy worthless.

To understand the health insurance grace period, let us look at an example: Your health insurance policy is set to expire on July 12, 2022, and you have forgotten to pay the insurance premium on time. The insurance company has offered a grace period of 15 days for making the renewal payment, taking the last date to July 27, 2022. If you make the premium payment by July 22, the policy shall become active again, and you shall continue to use all the benefits offered by the policy. If you do not make the payment by the above-given date, the policy shall become inactive, and you cannot make use of it for any claims.

Also Read: Health Insurance Portability

What happens by not renewing the policy on time?

In the event of you not paying the premium on time, during your grace time, health insurance companies could charge a late charge, which must be paid along with the premium. But there are other disadvantages also, because of your inability to pay premiums at a timely time:

  1. If you did not pay the premium payment within the due time, you wouldn’t be eligible to receive coverage benefits.
  2. The waiting period for any health problem you may be suffering earlier, also known as pre-existing diseases, shall get affected, and you’ll be unable to access the benefits due to lack of continuity.
  3. If you’re denied renewal during the grace period, you may have to register as a new policyholder. This means that you’ll be required to start the entire process of registration from the beginning, which shall reset all the benefits that you had accumulated with the previous policy.
  4. Certain illnesses that are classified as critical, like heart surgery, cancer etc., require a certain waiting period before you are able to avail yourself the treatment. Due to non-payment of premium, certain insurance companies might choose to cancel this coverage which will leave you without medical coverage to treat critical illnesses.
  5. Each health insurance plan is provided with a discount or bonus for not submitting any claims during the policy period. If you do not renew the policy on time, then you have to risk losing the NCB (No Claim Bonus).
  6. There are many health insurance providers offering free medical check-ups for on-time renewals and no-claim years. If you let your health insurance expire, then these free medical test benefits would be lost until you buy a new policy and continue paying the premiums for it on time.
  7. By not renewing the policy on time, you might have to buy a new health insurance policy, making you lose out on all the earned benefits such as wellness points, no-claim bonuses, discounts or rebates etc., leading to an increase in the premium of the new policy.
  8. There is a facility to change your health insurance company by porting your existing insurance policy over to the new company. But, if the current policy is canceled due to non-payment of premium before the grace period, you tend to lose out on the portability option.

Failing to pay the premium during the grace period

If you do not pay the premium during the grace period, the health insurance plan could be canceled due to the non-payment. Therefore, in the event of unexpected medical crisis that may occur in your life, you won’t be able to claim the benefits of coverage. Therefore, if you are hospitalized, it is your responsibility to pay for the expenses from your pocket. Also, the insurance company could also terminate your claim requests if you have raised any due to non-payment of premium.

If you wish to take advantage of the benefits of your chosen health insurance plan and you want to avail the benefits, you should make the premium payments regularly. It isn’t easy to obtain a new insurance policy that covers pre-existing conditions or opt for a health insurance policy at a later age. Therefore, if you do not pay your premium payment on the due date, it is your responsibility to make payment within this grace period.

It’s not wise to be without health insurance, even for an hour, especially during the current times. In case you’re not happy with the services or benefits offered in your current health insurance company, you have the option to change insurers without losing any benefits or bonuses or privileges that you have earned from your current plan policy. But that has to be done before the expiry of the existing policy or before the grace period ends.

Also Read: Types of health insurance policies in India

PayBima is your best online companion to search, select and buy the right insurance policy that suits your requirements. You can also get to know the features of the policy, compare and then finalize the plans that match your budget. Their dedicated customer support team will help you in shortlisting the perfect plan while also answering questions related to policies, including grace period and premium quotes.

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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