The grace period is the time given to a policyholder to renew the policy by paying the premium after their policy term ends. The grace period varies for different policies and for different insurers. There are some insurers who do not provide a grace period but most allow a 15-30 days period for you to renew the policy. For example, if your policy terminates on 1 January and you have a grace period of 30 days, you will have to pay the premium on or before 31 January to retain the policy or lose it.
So, what happens if you do not pay your premium on time and miss the grace period as well?
1. No coverage during the grace period
The grace period is for you to renew the policy. Since you haven’t paid the premium, your policy remains effectively suspended (during the grace period) and you cannot claim benefits during this time. Some insurers do provide some cover (accident, emergency, etc.) during this period but it is unwise to depend on their discretion.
2. Renewal can be denied
If you do not pay the premium in time, the insurer has the right to deny a renewal of the policy if you miss out on the grace period too. What is means that you will have to buy a new policy, in case of rejection, to keep yourself insured.
3. Waiting period
If you miss paying the premium during the grace period, your waiting period gets reset. This is the initial period of time under a policy during which you cannot make a claim. It is usually 30 days (varies with plan), which means that during the combined time of last grace period (30 days) and new waiting period (30 days), you may go uncovered for two months or more.
4. Pre-existing conditions
Most policies have 2-4 years of waiting period before they cover your pre-existing conditions. This means that the time and money you spent to get covered for your pre-existing condition gets nullified. With the new policy, you will have to undergo the whole process again, from scratch.
5. All benefits lost
There are other benefits like sum restoration, no-claim bonus, discount on premiums, plan up-gradation, etc., that get accumulated with time. You will lose all such benefits as your policy is considered lapsed.
Not paying the premium on time can have disastrous effects on your coverage, your insurance history, your eligibility to buy new policies, and you may even need to undergo stricter medical screenings to purchase new ones. It is, therefore, advisable to keep a close watch on your renewal dates and renew your policies well in time to avoid losing benefits that may cost even more in terms of medical bills.
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