Grace Period in Health Insurance & How Does it Work?

Imagine waking up one day and realising you missed your health insurance premium due date. Panic sets in! What if a medical emergency strikes? 😰

But wait, there’s a safety net: the grace period!

This unsung hero of health insurance gives policyholders a second chance, allowing them extra days to pay without an immediate lapse in coverage. It’s like hitting the snooze button on your policy, just enough time to stay protected. 😄

While it doesn’t cover claims until the payment is made, it prevents long-term financial setbacks. Read this article to learn about a grace period in health insurance and how it works.

Life can get really busy at times, and we might end up missing our premium payment.

Insurance companies do take this human behaviour into account and hence allow a certain period after the missed premium payment date, during which the policy is active. This extended period is known as the “Grace Period” in terms of health insurance.

In simple words, “The grace period is the extra time given to you after you have missed your policy’s renewal due date so that you can make the premium payment without losing the coverage.”

The grace period differs between different insurance providers and different types of policies. However, it is usually between 15-30 days and is specified in the terms and conditions of the policy. Make sure you read them carefully before buying a health insurance policy.

In health insurance, missing a premium payment doesn’t always mean losing coverage instantly. This is possible because of the Grace Period! It is an extended timeframe offered by insurers, allowing policyholders to pay overdue premiums and keep their policies active.

Here is how it works in a health insurance policy

1. If you miss a premium payment, your insurer provides a grace period (usually 15 to 30 days). 
2. During this period, you can pay the pending amount without cancellation of the policy.
3. If the premium isn’t paid within the grace period, the policy lapses and coverage is lost.

Although your insurance provider gives you a grace period for times when you might miss out, it is definitely not a good idea to wait for the grace period extension to pay your premium. Here are some major drawbacks for the same:

• No Health Coverage During the Grace Period: Believe us, that’s much more critical than it seems. Any claim raised during the grace period shall be considered void and be declined by the insurer.
• Loss of Cumulative Bonus: Most health policies come with a cumulative bonus that gets added for every claim-free year. When you fail to renew your policy during the stipulated time, you lose this cumulative bonus.
• Back to Square One for Waiting Period: The waiting period for coverage of critical illnesses and pre-existing diseases gets restarted to zero.
• Higher Premium During Grace Period: Some companies charge late fees if you pay your healthcare premium after the renewal date, during the grace period. The premium might further increase if you are a regular defaulter in timely premium payment.
• Loss of Portability Benefit: You can change your health insurance provider by porting your policy, but you can do so only while the policy is in force. The portability option expires once the policy goes to the grace period.

At Digit, we understand how important health insurance cover is and hence, to keep the continuity, we provide a grace period.

If the insured person has opted for payment of the premium on an instalment basis i.e., half-yearly, quarterly or monthly, the following conditions shall apply:

• If you have opted for the premium payment mode on a monthly basis, you will have a grace period of 15 days to pay the instalment premium due for the policy.
• If you have opted for the premium payment mode on all other terms (half-yearly, yearly, quarterly), you will be given a grace period of 30 days to pay the instalment premium due.
• During such a Grace Period, Coverage will not be available from the instalment premium payment due date until the date the company receives the premium.
• In the event of premium payment within the stipulated grace period, the insured person will receive the accrued continuity benefit in respect of the "Waiting Periods" and "Specific Waiting Periods." 
• No interest will be charged if the instalment premium is not paid by the due date.
• If the instalment premium is not received within the grace period, the policy will be cancelled.

In short, at the end of the policy period, the policy shall terminate and can be renewed within the grace period to maintain continuity of benefits without a break in policy. Coverage is not available during the grace period.

That’s it! 🙂 Your health insurance is renewed, and you remain protected without any gaps in coverage. But remember! Renewing within the grace period is crucial to avoid policy lapse, so act fast and stay covered!

Here are a few things you must consider when renewing your Digit’s health insurance policy:

• If you want to increase your sum insured, now is the time. You can’t do it anytime during the year.
• If you didn’t make a claim in the past year, make sure you have been given a no-claim bonus if your policy offers it.
• If you want to add members like your spouse or kids, you have the option to do so only at the time of renewal. Do give this a thought.
• You can change your health insurance needs by opting for add-ons as per your requirements.

It is important to pay your premium on time before the grace period ends, but in case if you fail to pay the premium within the grace period, this might happen:

• Your coverage may be cancelled for nonpayment if you fail to pay your health insurance premiums during the grace period. 
• You won't be covered in the event of a medical emergency or hospitalisation if this occurs.
• You can buy a health policy from a different insurance provider, but some insurers can also refuse to cover you.
• Additionally, if your prior policy has expired, certain health insurance providers could ask you to undergo a pre-medical test before providing new coverage. 
• This can increase the likelihood of not getting coverage or of paying a higher premium for a new policy.

The waiting and grace periods for health insurance are not the same. The grace period permits additional days to pay the health insurance renewal premium even after the due date has passed, but the waiting period in health insurance mandates waiting a certain amount of time before submitting a health insurance claim for a condition or operation.

Missing out on paying your health insurance premium on time can be very hard on many levels. The uncertainty of health, the hassle of going through waiting periods once again, and the lapse of many other benefits make it very important to pay your health insurance premium on time. 🫡

Especially if the insured is someone prone to illnesses or any such illness that requires a waiting period, it is absolutely necessary to pay your health premium on time and not let it slip into the grace period.

Hence, always remember to pay your premium on time! 🙂