The Importance of Health Insurance On-time Renewal

Health insurance plans offer coverage for medical costs incurred during a policy year. These medical expenses might include hospitalisation cost, pre and post hospitalisation expenses, day-care costs, etc depending on the health insurance plan. Health insurance plans are of a specific duration and require renewal at the end of the policy year for continued coverage and benefits. This renewal should be done within the due date for uninterrupted coverage. 

Let’s understand why it’s crucial to renew health insurance on time.

Importance of On-time Renewal of Health Insurance Policy

Renewing the health insurance plan on time is important for the following reasons - 

1. Continuing Protection- Renewing the health insurance plan on time has the obvious benefit of uninterrupted coverage. If you renew on time, the coverage of the plan resumes for another year without any gap or interruption.
2. No-claim Bonus- For every claim-free year, a discount of 5% to 10% per year is allowed which increases the sum insured of your health policy. It keeps on accumulating up to a specific limit. The on-time renewal allows you to carry forward the benefit of no-claim bonus to the next policy year and enjoy an enhanced sum insured without an increase in the premium. Non-renewal on time will reset all the accumulated no-claim bonus to zero and you would lose the benefit of increased coverage.
3. Reduction of the waiting period- Many types of coverage such as pre-existing illness or maternity benefits generally have a waiting period of 2 to 4 years from the inception of the policy. If the renewal of the policy is not done on time, the coverage would lapse. Thereafter, when you buy a new policy, the waiting period would apply again and you would lose the benefit of reduction in the period offered by the existing policy.
4. Tax Benefits- On buying health insurance plans, you are entitled to tax benefits under section 80D of the Income Tax Act, 1961. To continue enjoying tax benefits, you need to pay the premium of the health insurance policy in a financial year. When you renew, you pay the premium annually and can enjoy annual tax benefits.
5. Portability- On-time renewal of a health insurance plan is also necessary for you to enjoy the benefit of portability. Portability allows you to change insurance companies while preserving the continuity benefits of the existing plan. However, porting is allowed up to 45 days before renewals. When your health insurance policy lapses, you cannot port it to another insurance company.

Now that you know how beneficial it is to renew your health insurance policy on time, consider these things before you renew health insurance.  

Things to Consider at the Time of Health Insurance Renewal

At the time of renewing the health insurance plan, there are certain things that you should consider to enhance its coverage and benefits. 

1. Renewal Terms and Conditions
   You should review the renewal details of the health plan before renewing it. Policyholders are sent renewal reminders by the insurance company 45 days prior to the date of renewal with the details of the policy such as sum insured, claims made, no-claim bonus, etc. One must be diligent and inform the health insurance company if there are any discrepancies in the details of the policy as mentioned in the remainder mail.
2. Assess Insurance Needs
   With the steady increase in healthcare expenses, the existing policy may not have sufficient insurance coverage. So, you should assess your insurance needs, review your coverage and accordingly choose a higher sum insured or add a top-up or a rider to your base insurance policy.
3. Check Other Options
   If you are not satisfied with your existing insurer, then renewal is the correct time to port your health insurance policy. You can, therefore, look for other health insurance plans and port your policy if you find a better deal.
4. Addition of Top-up plans
   Top-ups are available to be added with health insurance plans to enhance the coverage. If you think you require additional coverage, you can enhance your existing plan by opting a top-up plan with it at the time of renewals.

Tips to Renew Health Insurance Policy

Although Renewal of health insurance plan is simple and easy, especially when done online, the following are few tips to renew health insurance policy:

1. Tip #1: Renew your health insurance plan on time, else in grace period
   Depending on the insurance company, a grace period of 15 to 30 days is provided if a person fails to pay the premiums within the due date. Though coverage is not available in the grace period, the renewal benefits of waiting period reduction and no-claim bonus are preserved. So, try and renew the policy within the grace period even if the policy has lapsed. Claims would be processed after the renewal premium is paid during grace.
2. Tip #2: Disclose New Illness, if any
   It is a good practice to disclose any new illness you are diagnosed with during the previous year to the insurance company. You can do this when you renew your plan in order to avoid any hassle when an health insurance claim occurs in future.
3. Tip #3: Addition of new members- 
   If there has been a new addition/deletion to your family, update the plan to include the new member in the coverage.

On-time health insurance renewals are important if you want to enjoy lifelong coverage. So, renew your policy on time, every time. Also, make sure to review your coverage at the time of renewal so that changes can be done if required.