Normally, in case of health insurance, if a policyholder fails to pay the renewal premium by the renewal date he/she gets a certain grace period to pay it. Most health insurers allow policyholders to renew their policies by paying the renewal premium during this grace period.
However, is the policyholder covered/insured during the grace period (until the policy is renewed)? Will the policyholder’s claim for any medical treatment taken during the grace period be accepted and settled by the insurance company?
Generally, the grace period of a health insurance plan is meant to take care of continuity benefits like No-Claim Bonus (NCB), time-bound exclusions and pre-existing diseases.
However, Dhirendra Mahyavanshi, Co-Founder, Turtlemint, a Mumbai-based Insurtech company, said that there is no written statement by the IRDAI stating that health insurance claims would be admitted even during the grace period. He said, “IRDAI clearly states that coverage is not available for the period for which no premium is received.
Thus, it depends on the insurer’s discretion whether a claim would be admitted. For a claim to be accepted, the premium is expected to have been paid for the tenure.”
Therefore, as per experts, once the health insurance policy renewal date is missed, the policyholder is not insured under the policy till the premium is paid even in the grace period.
Rakesh Goyal – Director, Probus Insurance an Insurtech Broking company, said, “The policy does not stay in force unless renewed. This simply means any claim filed during the grace period is not considered by the insurer for the settlement. It is advisable to renew the policy before the renewal date is missed or the grace period starts.”
What if the grace period is availed due to COVID -19 lockdown?
However, for policies expiring during the lock-down for which renewal premiums could not/cannot be collected, there is an extension of grace period till April 21, 2020, according to a circular of the IRDAI. The government was forced to impose a lockdown due to the spread of COVID 19.
The grace period may have been extended because many policyholders are still not equipped to pay the renewal premium digitally and might face problems in renewing the policy due to the prevailing lockdown.
Goyal said, “Considering the hardships that policyholders might face in renewing their policies under such conditions and to offer some relief to policyholders, there’s an extension of the grace period,” he said.
Moreover, not only are the policyholders facing issues but insurers, insurance distributors and other insurance entities are also finding it difficult to carry out their operations because of the lockdown.
Mahyavanshi said, “On humanitarian grounds, most insurers may allow the insured to pay the due premium at the time of hospitalization (in case this happens during the grace period) for the claim but before the claim is paid out. However, this depends on the insurer’s discretion. Therefore, it is prudent and wise to follow standing instructions for health renewal premium. “If you have any liquidity issue then you can even pay with your credit card as most banks are offering a 3-month moratorium on payment of credit card dues in line with the RBI guidelines,” he added.
Points to note
- The new renewal date will be one year from the date you have renewed your policy. For instance, if your policy renewal date was April 15, 2020, and you renew your policy during the grace period i.e. on May 15, 2020, then the new policy renewal date will be May 15, 2021.
- Goyal said, “If a policyholder is not renewed even in the grace period, then the policy lapses. Once the policy lapses, the accumulated No Claim Bonus and other benefits would not be included if the policyholder wishes to renew/buy the policy again after the grace period.” Moreover, the insurer can ask the policyholder to undergo the medical test if not renewed on due date but renewed in the grace period, he adds.