What is the grace period in health insurance

Simply put, the grace period is the extra time given by the insurance company as a second chance to pay the premium. If the payment is made during this time, the policy can be kept from lapsing. The grace period may vary depending on the type of policy. Health insurance companies usually offer a grace period of 30 days if you are paying half-yearly or yearly premiums, while 15 days grace period is given for monthly premiums. If you want to know about the grace period of your plan, please check the policy bond.

For example, if you have a policy from a health insurance company, for which you have not paid the premium by the last date of premium payment (say, 15 June 2021), then you will be given a grace period or extra days as per the policy bond. Suppose the grace period is 30 days, then the last date for depositing premium will be 15th July 2021 and if the grace period is of 15 days then the last date will be 30th June 2021.

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Following are the advantages of a grace period in health insurance:

• Keep away from penalty: Generally, if you do not pay the premium on time, then health insurance companies give a grace period i.e. a few extra days, in which you can pay the premium. Once the grace period is over, if you wish to make the payment to continue the policy, you may have to pay a penalty or fine. It’s best to know how long the grace period of your policy is and, if you have missed the premium due to any reason, deposit it within this time.
• No risk of policy lapse: If you do not pay premiums during the grace period, there is also a risk of the policy lapsing. However, it is up to the insurance company whether it accepts a claim in such a situation or not. If the policy lapses, then there is an option to buy a new policy. It can be costlier than the old policy as by then the age of the subscriber increases, due to which the premium rises. On taking a new policy, the waiting period for critical illness and pre-existing diseases will also start once again.

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The grace period is a convenience offered for the benefit of the customers. However, this benefits both parties - while the customer gets extra time to pay the premium, they still remain with the company. To some extent, it is also necessary for the insurance company to give a grace period to the policyholders, as some people are often unable to pay the premium on time due to financial or personal situations. In such cases, the grace period acts as a shield for the policyholders.

 Some other facts related to the grace period that you should know:

• If you fail to pay the premium within the grace period, the claim can be rejected by the insurer after the grace period is over.
• After the grace period is over, certain benefits of your insurance policies like 'No Claim Bonus' and 'Waiting Period for Pre-existing Diseases' cannot be availed.
• After the grace period is over, non-payment may result in the cancellation of the policy.

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As mentioned above, you will not be able to take advantage of a health insurance policy after the grace period is over. Thus, it is a kind of responsibility of the insured towards their own health and their family to make the payment on time or in the grace period. Non-payment of premium means that one may have entered into a financial security agreement with their loved ones, even if there is no great compulsion on their part to not pay the premium.

After the grace period is over, the policyholder may incur heavy losses, as the payments made till then become of no use. Also, dependents may lose financial support in terms of their health cover.

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It is not unusual to be confused about the difference between the waiting period and the grace period. The waiting period is the days after which you can be entitled to file a claim under the policy. On the other hand, the grace period is the time during which the insured gets one more chance to pay the premium. If they miss this opportunity, the policy lapses. To still continue the policy, the premium along with interest may have to be deposited.

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The grace period itself is another opportunity to collect the premium. If this period is exceeded, the policy lapses and usually the health insurance company does not renew the policy. You may be able to revive the insurance health insurance policy by paying a penalty, however, it depends on the insurance company whether they will give you the option for revival or not.

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Depending on different health insurance companies and the type of policy, the grace period can range from 24 hours to 30 days or more. Make sure you read the terms and conditions present in your policy documents to know the grace period, as it is not correct to assume that all health insurance companies offer a grace period of 30 days.

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Non-payment of premium even within the grace period can result in several losses, irrespective of the type of policy. Below are some of them:

Loss of coverage for pre-existing diseases

By the end of the grace period offered by most insurers, coverage for pre-existing diseases may be invalidated if premiums are not paid. In such a case, the policyholder may need to re-live the waiting period stipulated in the policy contract.

Loss of insurance coverage

An insurance policy can benefit you only when you make a claim on time. If you are not able to pay the health insurance premiums on time or during the grace period, the claim made by you may be considered invalid, leading to you losing the coverage of your policy.

Loss of no-claim bonus

If a person with a health insurance policy does not file a claim, then they can avail the benefit of a no-claim bonus. As a reward to the insurer, the insurance company can increase the coverage or give a discount on the premium. If the premium is not paid even within the grace period, then the no-claim bonus cannot be availed.

Loss of waiting period for critical illnesses

There is a waiting period for many serious diseases like kidney failure, cancer or heart attack, meaning that these diseases are not covered immediately after taking the policy and you need to wait for the time prescribed by the insurance company for their coverage. This happens not only in health insurance but also in life insurance. If the premium is not paid by the end of the grace period, the insured may be forced to go through the waiting period again.

Higher cost of renewing a lapsed policy

Generally, a new insurance policy needs to be purchased once the existing insurance policy lapses. In such a situation, along with the above-mentioned disadvantages, no-claim bonus and other such benefits, due to which your premium rate could have come down, cannot be availed. Now, if you want to revive the policy, it may be costlier than what the previous premium was.

Revive period: After the grace period is over, insurance companies can give an option to reactivate the policy within a specified period of time. This time is known as the revive period.

Portability loss

Some types of general insurance policies offer you to change the existing insurer and port your policy to the insurance company of your choice. However, if the premium is not paid by the end of the grace period, the policy terminates and you cannot avail the facility of portability.

Portability: It is like mobile number portability, where the number remains the same and the service provider changes. In the same way, the portability feature in insurance allows for your policy to remain the same as you switch insurance companies.

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Health insurers offer a grace period to ensure that your health coverage remains intact, even if you make a late payment.
After the grace period is over, the insurer can cancel the coverage, after which you will not be able to file a claim.
If the premium is not paid within the grace period, the insurer has the right to decide if they allow you to renew the policy or not. If they do not give the option to renew, then the only way out would be to take a new policy, for which not only the premium rate may be higher, but some changes may also be made in the terms and conditions.

Overall, non-payment or non-renewal of the policy within the grace period can cause inconvenience to the insured. So, make sure you pay the premium on time and if you are not able to do so due to any reason, try to get it done within the grace period. Not being able to do so would amount to exposing yourself and your family to health risks.

Also, remember that if your policy lapses and you need to take a new policy, then you may have to pay higher premiums than before, as you will be older at present and be at a higher risk of diseases. If you already have a disease then buying a new health plan that covers it will not be easy either.

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