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Most general insurance policies run for 12 months, though some policies allow policyholders to choose a semi-annual (six monthly) policy if they wish, and others – such as travel insurance – cover specific dates.
The renewal date for your insurance policy is based on the date you agreed with the insurer that the policy would take effect when you first signed up. This means renewal dates can fall on a weekend or public holiday.
Your insurer has to give you notice that your policy is going to expire. This is usually 14 days, but the renewal notice information will be listed in your Product Disclosure Statement. Under the terms of some policies, they will automatically renew unless you notify your insurer otherwise. This is another reason to read your PDS closely and understand your insurance policy.
Your insurance policy might allow for certain changes during the term of the policy, but the renewal notice might prompt you to take another look at your insurance policy and decide if you want to make any changes.
When you are renewing your policy, it is important to check that all of the information you originally supplied to the insurer is correct. You must let your insurer know if anything has changed.
For example, if you are renewing a motor vehicle insurance policy and you have since fitted special high-performance modifications to your car, you have a duty of disclosure, meaning you are obliged to tell your insurer about it.
You may also choose to examine the level of cover, perhaps if you have recently purchased new furniture or whitegoods for your home or completed a renovation.
In some rare instances an insurer may decide not to renew a policy. If so, i must give the policyholder at least 14 days’ warning.
Renewing your insurance policy
Renewing your insurance policy is usually quite straightforward. By paying your premium, you let your insurance company know that you agree to continue the policy. Your insurer will tell you how much you have to pay and how much time you have to make a payment on your insurance schedule.
It is important to meet the payment deadline.
If your insurer does not offer a grace period and you do not make your premium payment on time, then you may find yourself without any insurance cover.
If you decide that you are not going to continue the policy, you should make sure that you tell the insurance company before the renewal date. Depending on the terms and conditions in your policy, you may get charged for the time that the insurer extends as a grace period for payment.
When should I renew and review my insurance?
Though the annual policy renewal notice is a good prompt to look over your insurance policy and make changes, there are other times when your circumstances change and when you should notify your insurer because it may affect your cover.
These include:
- Change in relationship status
If you get married or enter a de-facto relationship, you should check how this affects your insurance policy. You would normally take out a combined home and contents policy, and you might find that you get a discount on other insurance, such as car insurance, if you and your partner both choose policies with the same insurer - Change of address
Moving house is a good time to review your insurance policy. You may find that if you move to a different suburb, your risk will change accordingly and this may affect your insurance premium - Renovations
Improvements to your property could affect your risk or your sum insured. Insurers will assess whether changes to a property, such as installing window and door locks and changing to hail-resilient roofing, could change your premium - Change in how you use your vehicle
For instance, if you start using your car for business it may affect your policy. If another person starts using your car more often, you may need to list that driver on your policy. - End of financial year
This is a good time for owners of small or medium enterprises to make sure their insurance policies are still relevant. Though it’s often a hectic time for small business owners, having the business’s paperwork in front of you means you can see how your business has changed during the past 12 months
Checking your insurance needs
At the time you are renewing your policy, it is important to check that all of the information you originally supplied to the insurer is correct. If there have been any changes to your circumstances, you should advise the insurer of this.
For example, if you are renewing a motor vehicle insurance policy and you have since fitted special high-performance modifications to your car, you have a duty of disclosure, meaning you are obliged to tell your insurer about it.
Before you renew your policy, check whether you need to change the level of cover. Take the time to work out if your possessions have grown in value over the last year. If you have made any significant purchases during the year, such as jewellery or perhaps an expensive camera, check to see if you need to list that item separately under the policy.
You can also complete a household inventory to help you make a list of the things that you own.
You can also do something as simple as making a paper or electronic list, and adding to that list when you make a major purchase. It’s a good idea to store this information off site in case of fire or other major disaster.
How to review and renew your insurance policy:
- Put a reminder in your diary well before the renewal date so you have plenty of time to prepare
- Check for changes to your Product Disclosure Statement (PDS) and call your insurer for more information
- Re-evaluate your needs. If you have more items in your home, for instance, you may need to increase your sum insured to avoid underinsurance, or list specific items on the policy. If you have an older car, you may decide you no longer need comprehensive cover
- Don’t focus on price alone. Choose the policy that offers the best value. When comparing policies, it’s important to choose one that offers the inclusions and features that best meet your needs. Consider product inclusions, deductibles, exclusions and coverage limits
- Make sure the information you provided to the insurer about yourself and the assets you are insuring are still accurate. Gifts and purchases made throughout the year can quickly add up. Check you have enough insurance and make sure any new assets are covered by your policy
- Talk to your insurer if you are unhappy with your premium. Many insurers will review your premium if you can provide more information.
- Australia’s general insurance market is highly competitive with a wide range of products to meet most people’s needs. Find an Insurer can help find the right insurer for you.
Safeguarding yourself and your family with a robust health insurance policy will help you tide over treatment expenses, especially unplanned hospitalisation. An active health insurance policy will protect you during such times. Therefore, it is advisable that your health insurance policy should not become invalid due to non-payment of the premium. Sometimes life can get busy and it is not surprising that you may forget to pay the premium. Thankfully, insurance companies give you a fair chance to pay the premium within a specific time frame. This time frame is known as the grace period in health insurance plans during which the insurer keeps your coverage active.
The grace period means it is a time the insurance provider gives after the due date to pay your premium before the policy becomes inactive. The grace period can differ between insurers and the type of policies. This time frame is indicated in the policy’s terms and conditions, usually between 15 days to 30 days. Make sure you read the policy wordings so that you do not miss out on paying the premium on time. The terms and conditions also specify if the No Claim Bonus (NCB) is valid during the grace period and if any claims will be approved or rejected when the premium is yet to be paid.
What is Grace Period in Health Insurance Plans?
Grace period in health insurance is an amount of time your health insurance company allows you to pay after the premium due date has lapsed. This is clearly specified in your health insurance policy document about the number of days by when you need to pay the premium.
Most health insurance companies do not settle any claims raised during the grace period until the premium is paid by the due date of the grace period. It is important to keep your health insurance active at all times to ensure a seamless process in case of unplanned hospitalisation. Make sure you pay the premium within the due date instead of depending on the grace period to avoid unnecessary hassles.
How Does it Work?
It is imperative to pay all outstanding health insurance premiums during the grace period so your health insurance coverage does not end. The insurer gives a grace period so that you do not miss out on paying the premium even if you have forgotten the due date. Here is an example to understand the grace period in health insurance better:
Example:
Your health insurance plan expired on 10 July 2020 and you have missed paying the insurance premium by the due date.
The insurance provider gives you a grace period of 15 days to make the payment.
The extended due date is 25 July 2020 – the last date to pay the premium to continue enjoying the coverage.
Do note: If you do not pay the premium within the grace period, any claims raised during the grace period will be rejected by the insurer. Also, once the grace period lapses, any accrued NCB, exclusions, waiting period for pre-existing diseases will become invalid.
Renewing Your Health Insurance Plans During the Grace Period:
Depending upon the type of health insurance policy and the insurance provider, grace periods for renewal of health insurance can vary. This can be anywhere from 24 hours to 30 days. Check the terms and conditions to know the renewal grace period on your health insurance plan. Also, your insurance provider may charge a penalty for paying the premium within the grace period. This is because of non-payment within the premium due date. You can renew your health insurance plan during the grace period to avoid losing the coverage.
How to Renew/Revive Lapsed Health Insurance Policy on Time?
There are two scenarios, one where you have not paid the premium within the due date and the second when you do not pay the premium within the grace period. You can revive the policy within the stipulated time period specified in the policy document, and you need to pay the accumulated unpaid premium along with penalties and interest. Some insurance providers offer schemes to revive lapsed health insurance and a deadline to avail the same.
However, if you want to renew your health insurance policy, which has expired but does have the grace period to renew it, you can renew your health insurance online as well as through the offline method. Follow the steps below to renew the lapsed/expired health insurance plan:
Step 1: Visit the insurance company’s website for online payment (For the offline process, talk to your insurance agent for more details).
Step 2: Log in to access your account.
Step 3: Choose the option to pay the premium, make the payment and receive the policy to your registered email address.
Major Drawbacks of Not Making the Renewal Payment on Time:
Like all insurance, health insurance also has disadvantages if you do not make renewal payments on time. Here are some of the major drawbacks:
Nil Coverage Benefits: Since you have not paid the premium, the coverage until you pay the premium will be considered void and any claims raised during the period will be considered invalid.
Loss of Pre-Existing Coverage: Certain policies and insurers invalidate the inclusion of pre-existing diseases in the policy. You may have to go through the waiting period again as stipulated in the policy’s terms and conditions.
Loss Waiting Period of Critical Illness: Certain critical illnesses such as cancer, heart surgery, etc. have a waiting period before you can avail of treatment. However, some insurance companies may cancel the inclusion. You will have to go through the waiting period before such critical illnesses are covered again.
Loss of No Claim Bonus (NCB): All health insurance plans are offered with a discount or a bonus for not raising any claims during the policy period. By not renewing the policy you end up losing the NCB.
Lapse of Medical Check-ups: Certain insurers offer medical check-ups upon completion of the required waiting period. By letting your health insurance lapse and by not paying the renewal premium, you may lose the medical check-up benefit. You may have to wait until it is offered again.
Renewing a Lapsed Health Insurance is Expensive: Since the policy lapses, you may have to buy a new health insurance plan. By losing the policy, you also lose the NCB that you may have earned. By purchasing a new policy you lose the discount and the result is a higher premium.
Loss of Portability: You have the option to change the health insurance provider by porting the existing policy to the new provider. However, when the existing policy lapses, you lose the choice to port the policy to a better insurance company.
Also, read: COVID-19 Health Insurance
The Difference Between Waiting Period and Grace Period:
There is a stark difference between the waiting period and the grace period in health insurance. One should not be confused between the two terms of health insurance. Below are the main differences between waiting and grace periods in health insurance:
| Waiting Period | Grace Period |
| Only for pre-existing conditions/illnesses or coverage such as maternity/newborn baby | For complete health insurance coverage |
| A longer period of up to 3 to 4 years | A short period of 24 hours to 30 days |
| No penalty or late fee | Penalty or a late fee may be applicable |
| Claims will be approved for treatment other than pre-existing illnesses or conditions | Claims will be rejected during the grace period for all types of treatment. |
How Grace Periods Can Affect Your Mediclaim?
Health insurance providers ensure you get enough time to pay the renewal premium. They do so by offering a grace period from the due date. Even if you pay late, within the due date of the grace period, you continue to enjoy the benefits of the policy such as waiting period, medical check-ups, the inclusion of pre-existing conditions, NCB, etc.
However, if the grace period is not offered by the insurance company on the policy, the health insurance policy lapses since you missed the deadline or the due date. In such a case, you won’t be able to raise a mediclaim and under the policy avail hospitalisation for treatment. This is especially crucial in case of an unforeseen hospitalisation like an accident.
Frequently Asked Questions:
Below are some of the common questions about the grace period in a health insurance policy:
Your health insurance coverage will cease to be active and will expire. You also lose out on any benefits such as No Claim Bonus (NCB), the waiting period for pre-existing conditions, loss of medical check-ups, etc. You may have to purchase a new policy which is of higher premium since you lose out on several benefits of the lapsed policy.
Upon expiry of the grace period, the policy lapses and you will not be able to renew the policy. However, you can revive the lapsed health insurance policy by paying penalties and accumulating premiums. This depends on the insurance company who may choose to revive the policy through schemes.
Different insurance companies and depending on the type of policy, the grace period can vary between 24 hours to 30 days. Make sure you read the terms and conditions mentioned on your policy document to know the specific grace period. It is not advisable to assume that all health insurance grace periods are 30 days.
Yes, you can pay the premium in advance and mention the commencement date of the new policy period. Based on your request, the insurance policy start date can be modified. However, it is advisable to renew the policy within the due date to avoid rejection of claims.
The health insurance policy remains active until the renewal date. A grace period is given by the insurer to the policyholder to pay the premium and then continue to enjoy the benefits. However, during the grace period claims raised will be rejected. Upon payment of the premium, the policy is activated and you continue to enjoy the benefits.
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| Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet; and is subject to changes. Please go through the applicable policy wordings for updated ACKO-centric content and before making any insurance-related decisions. |
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