A health insurance policy is the best way to save yourself and your family from the exorbitant medical bills that might come your way. You might be healthy today, but an unexpected medical expense can come out of nowhere! This is why investing in a health insurance policy becomes a significant financial decision that you make.
Most health insurance policies are yearly contracts that must be renewed every year for continued coverage. This is why it is equally important to make timely renewals for your policy. By doing so, you can continue to enjoy the benefits that the policy offers, like no-claim bonuses, not serving waiting periods again, etc. Timely policy renewals ensure that the policy doesn’t lapse and that its benefits remain intact.
This article aims at explaining what renewal in health insurance is and lists a few benefits of renewing your health insurance policy. So, let’s start!
What is the Renewal of Health Insurance?
Every health insurance policy has an expiry date and has to be renewed for continued coverage. When you fail to renew your policy, it lapses, and you are no longer entitled to healthcare coverage from the insurer. Any medical expenses incurred during this time cannot be claimed, whether on a cashless or reimbursement basis, and must be paid from your pockets.
In short, renewal of health insurance is when you decide to continue enjoying the policy coverage by making timely premium payments before the policy expires.
Let us now understand the benefits that a health insurance policy renewal offers.
What are the benefits of renewing your health insurance policy?
Here are a few reasons why you should renew your health insurance policy on time:
1. To continue coverage
The purpose of buying a health insurance plan is to have the medical needs of yourself and your family covered. This is ensured by paying timely premiums. You do not know when an unexpected healthcare need will arise. If you don’t renew your policy, you will not be able to make a claim for the jarring hospital bills that might knock on your door unexpectedly.
2. To avoid serving multiple waiting periods
The insurer will impose a waiting period during which it will not pay for specific treatments/diseases.
- Initial waiting period – It is a period of 30 days from the date of the policy issue.
- Pre-existing disease waiting period – It is a period of 2 to 4 years for pre-existing medical conditions at the time of policy purchase.
- Specified disease/treatment waiting period – It is a period of 2 to 4 years for a specified list of conditions like hernia, chronic kidney diseases, etc.
When you renew your policy on time, the best benefit is that you do not have to serve the already served waiting periods yet again. However, when you let your policy lapse or do not renew it on time, you will have to serve all the waiting periods again.
3. To avoid missing out on additional benefits
When you renew your health insurance policy on time, you will be entitled to additional benefits like a No-Claim Bonus, which is an incentive that your insurance company offers you for not making any claims in a year. Depending on your insurer, the NCB can be –
- An increased sum insured by a certain specified percentage, or
- A decreased premium by a certain specified percentage.
As this bonus is tagged with policy renewal, any lapse or delay in policy renewal will result in losing the accrued benefits. Hence, you must ensure that the policy is renewed with due diligence.
4. To avoid higher premiums or policy rejection
You will have continued coverage when you buy health insurance and keep the policy active by making timely premium payments. If you don’t renew your plan on time, it will lapse. Then, when you decide to buy a health insurance policy again, you might be asked to pay higher premiums or even be denied coverage altogether - because of age or health-related reasons. Hence, it is better to keep your policy active by making timely renewals.
5. To avail of the tax benefits
The premiums that you pay are eligible for tax deductions under Section 80D of the Income Tax Act of 1961. To ensure that you get such tax benefits, you must renew your policy on time, every time!
When you make a decision to buy a health insurance policy to cover the medical expenses of yourself or your family, you must also be clever enough to continue utilising its benefits. This is why renewing your policy on time becomes important - to ensure extended coverage and a whole array of benefits.