What To Do When A Health Insurance Policy Lapses?

10 min read Posted on 8 Jul 2024

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A health insurance policy comes with a fixed tenure. Normally, this tenure is for a period of one year. But what to do when a health insurance policy lapses? Nowadays, health insurance plans come with longer durations as well. There are plans which you can buy for a continuous period of two or three years by paying the two-year or three- year premium at once.

These long-term plans not only eliminate the hassle of annual renewals, they lower the premium cost too because there are premium discounts for choosing longer durations. However, even in case of long term health plans, renewals are required when the policy duration comes to an end. If you do not renew the plan on time, your health insurance policy lapses. Let’s find out what to do when a health insurance policy lapse and how it affects the policyholder.

What is a Lapse in a Health Insurance Policy?

If the health insurance policy is not renewed before the policy expiry date, the policy would lapse. A lapse of the policy means termination of health insurance coverage. If the health insurance policy lapses, the available coverage under the plan comes to an end. In case of a claim in a lapsed policy, the insurance company does not pay a single penny as the cover has stopped.

What to do When a Health Insurance Policy Lapses?

If your health insurance plan has lapsed, you should pay the renewal premium as soon as possible to renew the plan with existing coverage benefits.

Grace Period Renewal:

There is a grace period in health insurance plans. This period allows the payment of renewal

premium after the policy has lapsed. Most health insurance plans offer a grace period of 30 days. If the policy has lapsed but you pay the renewal premium during the grace period, you can restart the policy. The continuity benefits of reduction in waiting period and no claim bonus would be applicable in such policy which was renewed during the grace period.

Things-to-keep-in-mind about Grace Period:

Though there is a grace period allowed for reviving a lapsed health insurance policy, the grace period does not allow coverage. If any claim occurs, the company would not pay any benefits even when the policy is in the grace period.

Why a Lapse should be avoided?

It is always better to renew the health insurance plan before it lapses. A lapse should be avoided because of the following reasons –

No Coverage in the interim period:

There is no health insurance coverage in a lapsed policy. Given the high medical costs, these expenses could burn a hole in your pockets.

Portability:

A lapse prohibits your ability to port to a different company. If you want to change your health plan because of any service issue or better coverage features or any other reason, you lose the ability if the health insurance policy lapses. The request of porting should be made 45 to 60 days before the policy expiry date and not after the expiry of the policy period.

Renewal Benefits:

If the policy is not renewed during the grace period, you lose the renewal benefits of your existing health insurance plan.

Waiting Period:

In case of a lapse, you lose the continuity benefits of the waiting period on pre-existing diseases. The reduced waiting period on pre-existing illnesses and other treatments. You would, then, have to buy a fresh health insurance policy with a fresh waiting period from two to four years or as defined by the underwriter.

Limited Scope of New Policy:

If you are a senior citizen, you might find new health plans to have a limited scope of coverage than your lapsed health insurance plan. Even for others, your new ailment might not be covered under pre-existing clause, which would have otherwise been so, in your previous plan.

Lifelong Renewability:

Moreover, lifelong coverage is allowed only if the policy is renewed without a break. If the policy is not renewed within the grace period, you might not find a health insurance plan for your age.

No Claim Bonus:

Even the accumulated no claim bonus for not claiming in the previous years would be lost if the policy is not renewed on time.

How to Renew/Revive Lapsed Health Insurance Policy?

However, if your health plan has not been renewed and has lapsed beyond the grace period, all you need to do is buy a fresh plan. Since the same cannot be renewed now, you can either continue the same plan with your earlier insurance company by simply paying the premium and undergoing a pre-medical check-up, if the lapse is more than 6 months or compare and then buy a fresh health insurance plan for yourself which suits your needs the best.

Small steps to ensure that you do not lapse your Health Insurance Plan next time

Update your email id and phone number accurately with the insurer and update the same in case of a change, so that you do not miss renewal calls, emails, etc.
You can also create a standing instruction on your account, credit card, etc. so that the renewal gets automatically processed even if you are busy or out-of-the-country or unable to pay within the grace period. This way, you can never miss your renewal lifelong!

With the technology at our side, there is no excuse for missing renewal payment. It can be done seamlessly through net banking, phone banking, app banking, etc. and just with the click of a button.