Should you revive a lapsed health insurance policy or buy a new one?

There has been a sudden awakening of demand for health insurance with the advent of Covid-19 which led to more than 10% rise in premium in July 2020. The market anticipates another hike in premium due to the sudden spike in the Covid claims amid second wave of infections. It is primarily for the increase in premiums by the reinsurers and the high covid-led claims that the industry has witnessed for over a year now leading to an all-time high medical inflation.

Busy schedules and exigencies can lead to missing out of your insurance renewals as well. However, health insurance plans need to be on your priority list now as only a timely renewal would make your plan functional in such times of need.

With the lifelong renewability clause of health insurance plans, you only need to renew your plan on time in order to get all the benefits. If you miss your renewal date, your health insurance coverage ceases and your claims would not be payable!

What happens if the policy is not renewed on time?
If you do not renew before the due date, the policy lapses and the coverage stops. However, a grace period is allowed, after the due date, for renewing the lapsed policy. The grace period ranges from 30 to 90 days and allows you to retain the renewal benefits when you renew the policy.

So, if you pay your premium during the grace period, your coverage starts again without affecting any of your continuity benefits. You can even lodge a claim in the grace period, but it would be accepted only after you pay the due premium and revive the plan! After the grace period if over, you would not be able to renew your health plan thereafter.

Revival vis-à-vis a new policy
If your existing policy has lapsed, you have another alternative to renewal – buying a new plan. Before finding the ideal solution, let us understand both the options:
Reviving your existing health plan:

1. The waiting period reduces on renewal and you get continuity benefits
2. You can avail of the no claim bonus if you did not make any claims in the previous years
3. You can get loyalty benefits in terms of annual health check-up, wellness vouchers, etc. from your insurer on renewal

Buying a new health plan:
1. You can switch to a new policy with more benefits. You could also get better and enhanced benefits with lower premium as well
2. You can switch to a new insurer that offers the best post-sales and claim servicing

However, if you need to buy a new plan, you would have the following restrictions:

1. You might face coverage restrictions under the new policy if you have developed adverse medical complications over the years
2. You lose out on the reduction in the waiting periods and the continuity benefits and the accrued no-claim bonus

What is the ideal solution?
Though both the options have their respective pros and cons, reviving a lapsed policy makes more sense. The main reason is the reduction in the waiting period and the no claim bonus. This is where your existing health plan with years of renewability comes handy. If you are dissatisfied with your present insurer and/or the plan, you can always opt for portability on subsequent renewal. This way, the benefits of buying a new policy can be availed through porting too. So, if you have a lapsed health insurance plan, revive it rather than buying a new one.

The author is Co-Founder, Turtlemint – an InsurTech Company. Views expressed are personal.