Cost of health policy lapse!

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A running health insurance is a must for all. The renewal date is something which one should not forget. The insurance companies do their bit and give about 15-30 days grace period for the insurance premium payment. The need of higher coverage increases with age. If you renew your health insurance policy on time, you will continue to receive coverage despite changes in your age, your health, and lifestyle. The policy will go on. The waiting period will be over and then coverage for your existing illness will begin.

Once the waiting period is over, you do not have to face the risk of the policy being terminated due to changes in age, medical history, and lifestyle. But if the policy lapses due to your negligence then, you will have to restart your waiting period. If you have any pre-existing illness, then the waiting period can be up to two to four years. If a policy lapses, you will get coverage for existing illnesses only after a long wait.

Apart from this, when you do not make any claim in a policy year, the insurance company gives you the benefit of a no-claim bonus. this can be up to 5 to 50 percent annually. This can increase your original insurance cover, i.e., the sum insured by up to 100 percent. If you do not renew your policy on time and policy lapses, you will also lose the benefit of the no claim bonus.

The risk of falling sick increases with age. If you fail to renew your policy on time, you will have to pay a higher premium if you then look to buy a new policy. After you cross certain age, insurance companies provide insurance coverage only after a medical examination. In such cases, due to your age, medical history, and lifestyle habits, the insurance company may also refuse to cover you.

Your health insurance is not only beneficial for your health protection but also, it is helpful in income tax savings. Under Section 80D of the I-T Act, you can claim a tax deduction on premiums up to Rs 25,000 in a financial year. If your parents are senior citizens, they can claim a deduction of up to Rs 50,000 on premiums. If your health policy lapses, you might lose out on these income tax savings.

However, the goal of buying health insurance should not solely be for tax savings. It should be an essential part of your financial planning.

Financial expert Balwant Jain suggests that you should renew your health insurance policy well before it expires. Although insurance companies send reminders a month in advance that you should pay the premium, it’s advisable that you set your own reminders. Don’t wait until the last date to pay the health insurance premium; it’s better to pay it a month in advance. Keep increasing the insurance cover according to your family’s requirements. If you miss paying the premium for any reason, you may not get the coverage.

Therefore, always pay your health insurance policy premium on time. If you are careless in this matter, your policy will lapse. If there is any health emergency in your family, your entire financial planning can get disrupted.