Availing a good health insurance policy allows you to address medical and hospitalisation expenses without breaking the bank or causing undue stress on your monthly income. Additionally, if you choose a cashless facility, you don’t have to run around to arrange cash in times of medical emergencies. However, failure to renew your policy leads to its lapse and you can lose out on important benefits like these.
Timely renewal of your policy binds the insurer to continue covering your hospitalisation expenses in case of eventualities. This means you can enjoy medical coverage without any hiccups or gaps. In contrast, the failure to renew your policy leads to the nullification of your health plan, so the insurer is not under any obligation to address any claims. So, you’ll have to bear any and every medical expense that you incur in between the period of the lapse of your policy and the purchase of a new one.
Owing to increasing health risks, medical insurance premiums also head northwards with advancing age. Buying a health plan at a young age and renewing it in a timely fashion will give you affordable protection as the premiums are based on the terms and conditions when you first signed up. However, if you let the policy lapse, you’ll have to purchase a new one, and its premiums are calculated based on your prevailing age and the risk associated with it.
Completed Waiting Period
Every health insurance plan has a waiting period. Depending on the type of condition, the waiting period may vary from 30 days to 4 years. If your existing policy lapses and you avail a new one, you’ll have to serve the waiting period all over again. As a result, if you are hospitalised to be treated by the virtue of such conditions before the completion of the waiting period, you’ll be entitled to pay for the expenses for the same out of your pocket. To avoid sacrificing such accrued benefits, renew your policy on time.
Additionally, if you make a claim on a policy and let it lapse, the previous claim will be treated as a pre-existing condition. For instance, say that diabetes was not a pre-existing condition when you first signed up for a policy. You developed it eventually and were hospitalised for the same. While the insurer has to treat it as a regular illness and is bound to cover it, your diabetes will be treated as a pre-existing disease when fail to renew your policy and avail a new one. You’ll also be subject to a waiting period for the same.
No Claim Bonus
For every claim-free year, health insurers reward you with a No Claim Bonus (NCB). This can either take the form of discounted premiums or a percentage increase in your sum insured. Most health insurers offer up to a 50% cumulative increase in the sum insured at no extra premium. Say that you have a policy with a sum insured of Rs.5 lakh and your insurer offers a 5% cumulative NCB. If you make no claims on the policy for 2 years and renew it on time, your sum insured at the end of 2 years will be Rs.5,51,250. If you continue renewing it on time, you’ll keep earning NCB subject to certain conditions. If you fail, you’ll have to relinquish this benefit.
Ensure that you renew your policy within the due date or grace period to enjoy the above benefits and avoid unnecessary hassles. The ideal time to renew your health plan is 10-15 days before the expiry. Some insurers also send renewal reminders via SMS and email in order to help you avoid a policy lapse. Use them to your advantage or set your own automatic reminders to stay on top of your insurance game.
The writer is CEO, BankBazaar.com