Why timely re­newal of health cover is crit­i­cal

Pay the premium on time to re­duce stress and for con­ti­nu­ity ben­e­fits

The Hindu Business Line - - YOUR MONEY - BAVADHARINI KS

Joe has a health in­sur­ance pol­icy which was due for re­newal on De­cem­ber 1. By the end of Fe­bru­ary, he had to un­dergo a small surgery and de­cided to re­new his health pol­icy on Fe­bru­ary 1. But he was un­able to do so and lost all his pol­icy cov­er­age. This cre­ated un­due fi­nan­cial stress for him, as he had to bear the med­i­cal ex­penses, en­tirely. To avoid this and keep the pol­icy go­ing, it is bet­ter to pay up be­fore the due date. Here’s what you should know about re­newal of health pol­icy.

Grace pe­riod

Grace pe­riod is a saviour in dis­guise when due date is missed. It is a time-frame given to pol­i­cy­hold­ers to pay the premium due with­out any penalty. For health in­sur­ance poli­cies, the grace pe­riod given is usu­ally 30 days. Once the premium is paid, the pol­icy cov­er­age will con­tinue with­out loss of ben­e­fits such as wait­ing pe­ri­ods and cov­er­age of pre-ex­ist­ing dis­eases.

Ac­cord­ing to Vaidyanathan Ra­mani, Head Pro­duc­tion and In­no­va­tion Pol­i­cy­bazaar.com “Nor­mally, health pol­icy re­newal re­minder is trig­gered 45 days prior to the due date. The in­surer has to ac­com­mo­date the same terms and con­di­tions of the pol­icy un­til the due date. But you will not be cov­ered un­der the pol­icy in the grace pe­riod given to pay the premium...” Post the premium pay­ment, all ben­e­fits of the pol­icy would be re­stored and claims paid.

Note that, you can­not re­vive or re­new your health pol­icy, post the grace pe­riod. So when you pay the premium af­ter that pe­riod, it will be tan­ta­mount to you tak­ing the health pol­icy for the first time. This means, you will have to go through pro­ce­dures such as wait­ing pe­riod, med­i­cal check-up once again.

The prob­lem with pur­chas­ing new poli­cies is that, if you hap­pen to de­velop any health is­sues or com­pli­ca­tions, you might not even get a pol­icy, adds Vaidyanathan Ra­mani.

Ben­e­fits lost

If you don’t re­new your health pol­icy on time, there are some ben­e­fits you may lose. The first and fore­most be­ing the con­ti­nu­ity ben­e­fit — typ­i­cally, the wait­ing pe­riod ben­e­fits. It is a pe­riod of time that has to pass be­fore some or all of your health cov­er­age can be­gin. Sup­pose your pol­icy has a four-year wait­ing pe­riod and you had al­ready waited for two years, now, when you don’t re­new the health pol­icy, you will lose this key ad­van­tage and have to be­gin all over again.

“An­other sub­set of con­ti­nu­ity ben­e­fit is the spe­cific ill­ness wait­ing pe­riod, which is gen­er­ally one to two years. You will lose on this ben­e­fit as well, if you don’t re­new your pol­icy”, says Sapna De­sai, Head mar­ket­ing and com­mu­ni­ca­tions, Cigna TTK Health In­sur­ance.

Fur­ther, you will also have to for­feit the no claim bonus (NCB) if the health premium pay­ment is not paid on time. The in­surer gives a cer­tain per­cent­age as sum in­sured that comes as a bonus, known as NCB. This bonus gets ac­cu­mu­lated over a long pe­riod up to a cer­tain limit, pro­vided you don’t make any claim in­be­tween. For in­stance, if you have a ₹10-lakh pol­icy and you have not made a claim and re­newed it on time, the in­surer will give you an ad­di­tional sum in­sured (say 10 per cent of the SI) as bonus. In this case, you will have ₹10 lakh pol­icy plus ₹1 lakh as bonus. You will not be able to avail your­self of this ben­e­fit if you fail to meet the premium pay­ment dead­line.

Other ben­e­fits such as one­time dis­counts on premium may also be de­clined if the pol­icy re­newal is missed.

Re­mem­ber, by not re­new­ing your health pol­icy, you will also be let­ting go the tax ben­e­fits un­der Sec­tion 80 D. No claim bonus Dis­counts, if any

Con­ti­nu­ity ben­e­fit

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