What Happens When You Let Your Insurance Policy Lapse?

If your health insurance policy lapses, the biggest concern is losing your coverage. Consequently, the insurer will not pay for any medical expenses you have during that time. Moreover, a lapsed policy could mean losing any accumulated no-claim bonus you've built up. The waiting period already served for covering pre-existing diseases will also be lost, meaning you may need to restart the waiting period with a new policy. To reinstate a lapsed policy, insurers may charge a reinstatement fee, and they might also deny coverage based on an underwriting assessment. Hence, it is important to pay premiums on time and keep the policy active to utilise all the benefits.

Grace Period For Policy Renewal

“Most insurance providers generally give you between 15 and 30 days to settle your premium payment before your coverage becomes inactive. During this time, the policy remains active, and it can be reinstated without extra charges. An individual can avail of all the benefits included in the policy if the premium is paid within the grace period. However, if one hasn't paid the premium within the grace period, then the policy lapses,” says Bhaskar Nerurkar, head- health administration team, Bajaj Allianz General Insurance.

It can still be reinstated, but the time duration for that varies from insurer to insurer. Reinstating a lapsed policy can come with some hurdles. You might find that some coverages aren't available, reinstatement fees could apply, and you may even need to undergo medical tests. You might also have to fill out a new application form, essentially treating your policy as if it were brand new.

How To Port Your Insurance Policy Without Losing Benefits 

With the portability option, one can switch to another insurer without losing the past benefits of the policy. It allows you to transfer benefits, such as the waiting period and no-claim bonus, to a new insurer in case of health insurance policies. To port your insurance policy, you should begin the request at least 45 days before your existing policy is due for renewal. This involves informing your current insurer and then applying with the new insurer, making sure to provide all the necessary information and documents.

“Customers porting their policy between T-15 and T+7 days (relative to the previous policy's expiry date) will continue to receive past benefits. This is subject to the terms and conditions of the new plan. This process, known as portability, ensures that the waiting period credit for pre-existing conditions and other time-bound exclusions is transferred to the new insurer,” says Siddharth Singhal, head of health insurance, Policybazaar.

“It's crucial to pay your premiums on time. If you happen to miss a payment, make every effort to complete it within the grace period. This ensures you avoid any loss of coverage,” says Nerukar.