Health insurance acts as a financial cushion that keeps you covered and protected, ensuring that you receive proper medical care without worrying about the costs. Failing to renew your health insurance is like running out of fuel, which can leave you stranded and vulnerable during times of need. Just as you wouldn't drive a car with an empty tank, it's crucial to keep your health insurance coverage up-to-date.
In this article, we discuss all that you need to know about health insurance renewal, its importance, and its guidelines. So, let’s dive right in!
What is Health Insurance Renewal?
A medical expense can be financially devastating, especially if you require expensive medical treatment or hospitalisation. In such cases, you could end up paying exorbitant out-of-pocket costs - which could drain your savings. A health insurance policy provides financial coverage for such planned and unplanned medical expenses that may be incurred by you.
Health insurance plans are valid for a specific period, say 1 or 2 or 3 years, depending on the plan and the insurer. They need to be renewed for continued coverage after this period expires. Regularly renewing your policy ensures that you have access to healthcare services whenever you need them, without having to worry about the financial burden.
Importance of Health Insurance Renewal
There are several reasons why renewing your health insurance policy before its expiration date is important -
It Provides Continued Coverage
When you renew your health insurance policy before its expiration, it ensures uninterrupted coverage and helps you avoid any gaps that may leave you vulnerable to medical expenses. You can have peace of mind, knowing that you're fully protected at all times.
It Helps You Avoid Repeated Waiting Periods
Most health insurance policies have waiting periods that need to be served for certain benefits and coverage to come into effect.
Initial Waiting Period: You are not eligible to make a claim for any health condition during the initial 30-day period of the policy. This does not apply to accidents - they are covered from day 1.
Pre-existing Diseases Waiting Period: A pre-existing illness refers to a medical condition that was diagnosed or treated within four years before the policy purchase. All health insurance policies have a waiting period of 2-4 years for these pre-existing medical conditions.
Specific Disease Waiting Period: Insurance companies mandate waiting periods for certain health conditions like haemorrhoids, chronic kidney disease, spinal disorders, hernia, etc., for a period of 2-4 years.
If you have completed these waiting periods already, renewing your policy on time will continue to keep these in effect. If you let your policy lapse, you will have to go through the waiting periods again - which will leave you vulnerable to healthcare costs yet again!
Enjoy No-Claim Bonus
If you don’t make any claims in a year, many health insurance policies offer a no-claim bonus during renewal. This bonus is a reward for being responsible and taking care of your health. With this bonus, you can either get decreased premiums at renewal or an increased sum insured from your insurer at renewal. However, if your policy lapses, you will lose the no-claim bonus accumulated under your policy.
Under Section 80D of the Income Tax Act of 1961, you get tax deductions for the health insurance premiums you pay. By renewing your policy on time, you can keep on enjoying such tax benefits.
Guidelines for Health Insurance Renewal
Let's now discuss some important points you should take into account when renewing your health insurance policy –
Assess the sum insured
When purchasing a health insurance plan, you might tend to focus on saving premiums, which often leads to choosing a lower sum insured. Opting for a lower sum insured might result in higher out-of-pocket expenses during medical treatment. Although you may save on your premiums, you would still have to pay substantial costs during any hospitalisation or treatment.
During the renewal of the policy, it is essential to assess your cover amount and determine if it is sufficient for your current needs. This becomes especially important if new members have been added to the policy (in case of a family floater). Increase the cover amount if you think it is low or inadequate.
Addition/removal of members under the plan
If you are covered under a family floater plan, you may need to add/remove members during health insurance renewal. This may be because of births, marriages, deaths, changes in relations, etc. Make the necessary alterations to your policy and reassess the sum insured as well. You must ensure that the coverage is adequate for all covered members.
For example, Malini and her parents are covered under a family floater policy. Her father passes away, and hence, Malini will need to remove him from the family floater - which she can do at renewal.
Check whether you need the associated features/benefits
Health insurance plans come with certain features and add-ons like Room Rent Waiver, Super No Claim Bonus, Critical Illness Add-On, etc. Therefore, before renewing your policy, it is essential to evaluate whether you need to add or remove such features, so your health insurance plan caters to your healthcare needs.
For example, Aditi is covered by an individual health insurance plan with a sum insured of Rs 3 Lakhs. Her health insurance plan has a room rent limit of Rs 3000 and she feels that the rooms available at the cost may not be adequate for her needs if she were to get hospitalised. So, she opts for the Room Rent Waiver add-on during renewal, which negates any room rent limits in her policy. Her claim amount will not be affected if she chooses a room beyond the stated limit.
Check the payable premiums
When renewing your health insurance, make sure that the plan has a sufficient sum insured, that all your family members are covered and that the premiums you pay are reasonable.
Evaluate the premiums you’re paying and compare them with the coverage of your plan. If you feel that the premium is too high, you should look for other health insurance plans that give you the same level of coverage at a lower cost.
Check if you need to port to a new health insurance plan
Porting is an option that allows you to transfer your current health insurance policy to another policy while preserving the benefits and rewards you have earned. You can choose this option if your needs change or if you come across a better offer with another insurer.
Porting a policy is only possible at the time of renewing your policy, and you will have to notify your insurer about the same 45 days before renewal. Carefully review your policy's coverage and premiums at renewal so you can make the right decision!
For example, Jill has been covered under a health insurance plan from insurer XYZ for the last 3 years. She has never made a claim and has accumulated a no-claim bonus on her policy. On renewal, Jill finds out that the premium for her existing plan has gone up and it no longer fits her budget.
So, she decides to explore other options and finds a plan from insurer ABC that offers similar coverage for a lower premium. Jill then decides to port her existing plan to ABC’s plan. Jill will be able to retain the bonus and the waiting periods served under her existing plan.
Pro-Tip: Ways to Ensure Timely Payment of Health Insurance Premiums
Here’s how you can make sure that your health insurance premiums are paid on time –
Set reminders on your phone or laptop for the policy expiration and renewal dates.
Download your insurance company's smartphone app to complete the renewal process easily.
Keep track of the premium payment reminders sent by your insurance provider through SMS, email, etc.
Renewing your health insurance plan ensures that you and your family remain protected in times of medical need. Before renewal, it is essential to evaluate your current health requirements, examine the existing coverage and premium amounts, and compare them with other policies. Taking all these factors into account can help you make a well-informed decision, ensuring that your health insurance policy provides sufficient protection and meets your healthcare requirements.