What To Do If A Health Insurance Policy Lapses
Published On Oct 30, 2020
A health insurance policy would lapse if it is not renewed timely by the due date or before the end of grace period. At times, though, we tend to forget about a policy, particularly if the renewal is due once a year or even later like once in two or three years. In an unfortunate event when we forget to renew it even during the grace period and lose coverage due to policy lapse, what are our options?
There are just two choices before you:
1. Policy Revival
2. New Policy enrolment
Health Insurance Policy Revival
When non-payment of premium is unintentional, insurance companies tend to take a more lenient approach by allowing policy revival based on their appraisal of a person’s health, intent, ability to pay, and various other factors. [Note that this process is called REVIVAL which is different from RENEWAL].
Policy holders who are at default can approach the insurance company requesting for revival. If the case is eligible, the insurer would provide details about the revival procedure. An agent servicing the policy can also help.
Policy revival is at the discretion of insurance providers and varies from one company to another. Insurance providers usually allow a revival within 6 months of a lapsed policy. Some companies may allow even greater length of discontinuity as per terms and conditions or on a case-to-case basis.
Insurer’s generally follow a standard revival procedure which requires the following:
- Evidence of unchanged medical condition
- Evidence of unchanged premium paying ability
- Dues, fines and penalties
- Any other evidence of genuine intent
The Insurer, in order to protect itself from risk, would require evidence from the policyholder to be assured that the default was not intentional and there is no foul play behind it. The policyholder also needs to ensure that the policyholder’s medical condition or financial status has not changed drastically that increases the insurer’s risk. In other words, the insurer would need to know if there was any recent critical illness or income loss. In the absence of any major risks, the insurer would allow a revival upon payment of overdue premium, late payment charges, interest, etc.
New Health Insurance Policy Enrolment
Sometimes, instead of reviving an existing policy which has lapsed, it is better to opt for a new policy after comparing the premium amount for a new policy with the overdue premium and penalties for the existing one. With new product offerings from insurance companies, a newer product can provide better benefits.
However, as renewal premium isn’t the only consideration, one needs to exercise utmost caution and not lose sight of accrued benefits of the existing policy.
Health care costs are often a big concern in most families. It is important to obtain coverage at an early age and continue to renew the policy to avail various policy benefits which are often cumulative in nature. Insurance companies provide reminder services to policyholders for timely policy renewal in order to avoid lapse as revival processes can be a hassle and there is always a risk of losing benefits and insurance cover. Policyholders should take advantage of such facilities and try to renew on time and enjoy peace of mind.
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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.