The grace period is a window of time given after the health insurance due date for individuals to make payments towards their health insurance. A typical grace period is from 7 to 30 days based on the insurer's terms and conditions.
Let us consider this analogy to understand it better: Your weekend is all set and you are enjoying a movie at home and suddenly you find yourself in pitch dark at a crucial point in the movie. You soon realise that you didn't pay the electricity bill on time! You pay the bill and make those frantic calls to the electricity board only to realise that you have to wait till the next day.
If you have ever faced such a situation then that’s exactly what missing out on a grace period looks like and sometimes the chances of getting the power (read: health coverage) back are zero.
Let's see how important this term can be for an individual and the cons of not paying the premium on time.
Grace Period for Health Plans
Every health insurance company has its policies and rules when it comes to grace periods. But the general modus operand is quite similar and can be broken down into the following:
You don’t pay your premium on time.
Policy goes into a grace period.
If no payments are made the policy expires/lapses.
If payments are made with additional penalties the policy is revived.
The Pieces in the Grace Period Puzzle
The duration of the grace period depends on several factors including:
1. Type of Insurance Policy: An individual health plan’s grace period may be smaller than a family health plan.
2. Payment Tenure: An annually paid health plan will have a larger premium amount and hence have longer grace periods while it may shorten for a monthly or quarterly plan.
3. Insurance Provider: Each insurer sets its own rules when it comes to grace periods ranging from 7 to 30 days.
4. Time of Claim: Some insurers are flexible enough to adapt to sudden claims and adjust the premium amount from the claim settlement.
How to Renew Health Plans During Grace Period
The first step after realising that your health insurance is in a grace period is to immediately contact the insurer for premium payment terms.
If you are within the grace period you will have to make some additional payments towards late payments and can revive your health plan. Some insurers will seek additional documentation from you during the revival.
Understand the policy terms and conditions to see if you are in for a loss.
Reinstate the policy through a documented approach with policy details, KYC, and other insurer-specific documents.
Some insurers may ask you to go through a medical examination or fill out a questionnaire mentioning your current health status.
After making payment get a receipt that specifies that your policy has been revived.
What if You Fail to Revive Your Health Plan on Time?
You might have to face some severe repercussions even a lapse in your health plan if you don’t act during the grace period. Some other possibilities for failure to make payments during grace periods are:
You can’t claim coverage during the grace period.
Some health plans may outright disallow renewal
You may have to restart the Waiting Period before your health coverage resumes
You might have to wait for re-existing disease coverage as there will be new medical documentation involved.
You may have to pay a hefty amount as a renewal fee.
You may lose out on the Pre-Existing coverage.
The chances of selecting a new health plan and starting premium payments from the start are also high.
To ensure that you don’t find yourself in this mess opt for a health plan that is light on your pocket and high on savings within your budget to safeguard yourself and your family. Keep reminders or opt for an ECS auto-debit facility to shrug off the task of remembering the dates.
As the sum assured on the health insurance outweighs the premium paid, it is imperative to keep track of the due dates so that you don’t miss out on the benefits. During the ups and downs of life it is possible to go through financial upheavals but reminding yourself of why you started with health insurance can help you keep track of the due date and your well-being.
Frequently Asked Questions (FAQs)
Are Grace Periods and Waiting Periods the same?
Waiting period is a term used to define the time after buying a health plan before which you can claim coverage benefits, whereas the grace period is tenure after the premium due date during which you have to make payments to keep the health plan active.
Can the renewal of the Health plan be denied?
Yes, a renewal can be denied if there is some illegal action like fraud or an imposter involved that is unlawful under the policy rules.
Do I have to pay additional penalties if I miss the paying on time?
You might have to pay the late fee and some additional revival charges as per the insurer's terms and conditions if you miss out on paying on the due date.
Will my health insurance lapse if I fail to pay during the grace period?
The grace period is your last chance at reviving your policy. If you fail to make the premium payments you may have to forgo any coverage and claims.