In the normal course, the date of expiry of your current health insurance policy is the due date for its renewal. Grace Period is the additional time allowed after the due date for paying the renewal Premium, if you miss making the payment by the due date. The advantage of paying the renewal Premium within the Grace Period is that the policy is treated as renewed without any break, and thereby, the continuity benefits under the policy stand protected.
However, please note that any claim for medical expenses incurred during the Grace period is not payable under the policy.
Grace Period for renewing a Health Insurance Policy is mandatory and is a right given to policyholders by IRDAI, the insurance regulator. The Grace Period allowed as per Health Insurance Regulations is 30 days. However, where the Premium is paid in instalments, the Grace Period is limited to 7 days.
If you pay the renewal Premium after the Grace Period is over, the continuity benefits will be lost, and the insurance company will treat your coverage as starting anew.
Let us now understand what is meant by the protection of continuity benefits which is the benefit given to the policyholder on renewing the policy within the Grace Period.
A Health Insurance Policy usually comes with certain Waiting Periods for availing its benefits which are as follows:
- Under a fresh/new policy, there is a Waiting Period of 30 days to avail a claim unless the claim is due to an accident.
- For some diseases/conditions as specified in the policy, the Waiting Period ranges from 2 to 4 years.
- Similarly, for any pre-existing disease (PED), the Waiting Period can be up to 4 years, depending upon the type of the policy and the insurer.
- Where the policy provides maternity cover, the Waiting Period is usually 12 months.
Effects of the Grace Period on the Waiting Period
Only the continuous renewals of the policy (without a break) will be considered for the completion of the Waiting Period. In case you have renewed the policy after the grace period is over, the Waiting Period will start afresh from the date of renewal, and thereby, the policyholder/insured person has to wait much longer to avail the policy benefits (for the diseases/conditions subject to a Waiting Period).
However, a renewal within the Grace Period (although there is a break) will be considered as a continuous renewal for the purpose of counting the completion of the Waiting Period, and there lies the advantage to the policyholder by renewing within the Grace Period.
Let us understand all the above with an example.
Example
Assume that Mr Krish had purchased a Health Insurance policy on 01.01.2019, which provides coverage for PED with a 48-month Waiting Period, and this policy has a Grace Period of 30 days for renewal.
He has continuously renewed the policy for 3 years up to 31.12.2021. However, while renewing the policy further, he missed the renewal date and paid the Premium only on 15.01.2022. Since he paid the renewal Premium within the Grace Period of 30 days, the continuity benefits under his policy stand protected, and the previous 3 policy years (36 months) will be counted towards the completion of the Waiting Period for PED. Hence, he has to wait for one more year (till 01.01.2023) to avail coverage for PED.
Nevertheless, the policy will not cover the cost of any treatment during the period the policy was not in force, in this case, from 01.01.2022 to 14.02.2022.
On the other hand, if he had paid the renewal Premium on 15.02.2022, that is, beyond the Grace Period of 30 days, he would have lost the continuity benefit, and the 48 months Waiting Period for PED would begin afresh from 15.02.2022.
In conclusion
It is absolutely essential to renew your Health Insurance policy on time, and in any case, within the Grace Period. Although the insurance company will remind you of the renewal by sending a renewal notice well in advance as a service measure, it is also important for the policyholder to keep track of the renewal and take timely action.
