Insurance providers offer a Grace period for individuals and policyholders who fail to pay premiums on time. The grace period is considered the time or the extension of the number of days the provider offers to the policyholder to clear the payment due on premium. The grace period is offered after the due date is over. In general, insurance providers of a grace period of 15 days from the due date of payment. In some cases, providers also offer a negotiable extension of up to 30 days.
Let’s take a look at the Grace period, waiting period, and effect on medical insurance
due to the grace period.
Grace Period In Health Insurance Premium
All insurance providers have a predetermined extension of time offered to policyholders in case of failure to pay premiums on time.
During the grace period, a policyholder is given the freedom to clear the payment of premium without losing coverage of the policy. A 15 days general extension is offered by 95% of insurance providers. Often providers also extend the 15 days grace period to a month. While under the grace period the policyholder still gets coverage of the policy and is not restricted to claims.
Primary Features Of Grace Period
Insurance providers can offer a small Grace period to mitigate the risk of liability.
- The most common Grace period extends from 15 to 30 days. Even if the due date of the premium is over and the grace period is active, a policyholder is still eligible for coverage under the insurance plan.
- Non-payment of a premium during the grace period leads to lapsed policy. In such a scenario, the policyholder has to go through the policy application process all over again.
- Payment of premiums during the Grace period helps the policyholder to retain the insurance. However, there are no bonuses during the Grace period for maternity coverage or pre-existing disease. The policyholder loses the progress of a policy and may have to go through the waiting period all over again.
Waiting Period In Health Insurance
When a policyholder gets a new policy, a general waiting period of 30 days is offered right from the start. Hospitalization charges are not payable by the insurance provider during the waiting period. However emergency hospitalization due to an accident can be filed as a claim by the policyholder.
The waiting period in health insurance
is also not applicable to subsequent policies under renewable. However, all terms and conditions regarding the waiting period and grace period differ from policy to policy.
Renewal Of Health Insurance Plans During Grace Period
It is important to understand the difference between the health insurance renewal
during Grace period and the insurance waiting period. During the insurance waiting period, the policyholder usually waits for a certain duration before placing the actual insurance claim. On the contrary, the Grace period in health insurance is the extension of days offered by the provider to complete the due premium.
For example, if the insurance policy renewal date is due on 1st of April 2021 and the grace period offered is till 30th of April, any failure to make payment during the grace period can restrict a request for renewal even if the policyholder wants to make the payment the very next day.
Drawbacks Of Not Renewing A Health Insurance Policy On Time
Non-renewable of insurance premiums on time leads to the following disadvantages:
1. No Insurance Coverage During Grace Period
A policyholder failing to pay the premium on time will not be able to avail coverage during the grace period. The policyholder will also be restricted to file a Mediclaim during the grace period.
2. Denial Of Renewal
Insurance providers in some cases may choose not to renew the health insurance policy of a policyholder who has failed to pay the premium on time. All the coverage and premium paid will be lost and benefits will not be allowed to avail. In such a scenario, the policyholder will have to avail a new plan.
3. No Coverage Allowed For Pre Existing Diseases
During the waiting period, continuity benefits are usually not allowed. The policyholder becomes a new customer and will have to wait to go through the insurance waiting period. Once the waiting period is over, only then the pre-existing diseases will be covered.
Effect Of Grace Periods On Mediclaim
In the absence of a grace period or missing the date of grace period for renewal of health insurance, the insurer can deny coverage for late payment.
Mr. X missed paying the health insurance premium on time and also during the grace period. A health emergency comes up requiring hospitalization and expensive treatment. Mr. X raises a Mediclaim but the insurance provider canceled for non-payment. Besides cancellation, the insurance provider also refused coverage until the treatment is over.
In such a scenario the only option left for Mr. X is to buy a health insurance policy at an exorbitant premium and start over the terms and conditions that may apply.
It is important to avail all the benefits of the health insurance plan given the exorbitant premium rates paid by the policyholders. To ensure the same, it is also necessary for the timely payment of premiums.
Getting a new policy with a pre-existing condition or at a premium lower than the existing premium is not easy. Missing out the premium date even for once should be compensated during the grace period in health insurance to avoid a lapsed policy.