May 17, 2009

Health Mediclaim Insurance: 5 Important Reasons to Continue Your Existing Policy

It is always better to renew the health / mediclaim policy well in time (at least 15 days before the due date) so that you don’t lose the added benefits which come from continuity of the policy. Don’t ever think that the company or your agent is going to send you a reminder. Insurer may send you renewal notice as a matter of courtesy, but it’s not obligatory for them. Therefore, make sure that you remember the renewal date of your health mediclaim insurance policy like you remember your anniversaries.

Following is the list of benefits which you get entitled for over a period of time due to continuous renewal of your health mediclaim policy from the same insurer and stand to lose out due to non-renewal of your policy in time or due to change of insurer:

Health Mediclaim Insurance - Benefits of Continued Coverage / Timely Renewal

1. No Claim Bonus (NCB) / Discount
Unlike other general insurance policies, a health mediclaim policy doesn’t give you any discount in renewal premiums for claim free years. Instead health mediclaim policies such as Bajaj Allianz Family Floater Health Guard Policy and National Mediclaim Insurance Policy-Individual allow you an increase in sum assured by 5% for every claim free years subject to a maximum cumulative bonus of 50% of the basic sum insured (i.e., 10 claim free years of insurance).

However, there are exceptions also; for example, Star Family Health Optima Policy allows No Claim Discount @ 10 per cent (non-cumulative) for every claim free years. Similarly, ICICI Lombard HealthCare Insurance (a family floater health plan) gives No Claim Discount of 5% on premium for every claim free year (subject to a maximum of 25%) instead of no-claim bonus. Reliance HealthWise Policy provides for a renewal discount of 5% of renewal premium (if no claims made in the previous year) subject to a maximum accumulation of 50%.

2. Coverage for pre-existing diseases and temporary exclusions
As already mentioned in the earlier post – Health Mediclaim Coverage & Exclusions, in most of the health mediclaim policies, pre-existing diseases gets covered usually after 4-5 years and there are certain diseases (even if they are not pre-existing) which are covered from 2nd or 3rd year onwards.

Now, if there’s a gap in renewal of your health mediclaim policy or if you shift to another insurer, the exclusion period again starts from scratch, nullifying all your timely renewals during the previous years. For example, suppose you make timely renewals of your health mediclaim policy during first 3 years and in fourth year there is a slight delay of a few days, this would make the effective exclusion period 7-8 years for pre-existing diseases and 4-5 years for temporary exclusions.

3. Waiting Period
As you know that most health mediclaim policies don’t allow for any claims during the first 30 days; in case of non-renewal of policy in time or change of insurer this waiting period of 30 days also starts afresh.

4. Free Health Check-ups
Most health mediclaim policies provide that after 4 claim free years (without any break) you get entitled for reimbursement for the cost of medical check-up limited to 1% of the sum insured. For example, FGI Health Suraksha Family Floater allows free medical check-up of any two members subject to 1% of the sum insured up to a maximum of Rs 4,000 for a family policy. Similarly, while Apollo DKV Easy Health Family Floater Standard Plan reimburses 1% of the sum insured every fourth year, Premium Plan reimburses 1% of the sum insured subject to a maximum of Rs 5,000 per person every 2nd year.

5. Ailment suffered during the previous coverage
Even the ailments suffered (irrespective of whether you made a claim or not) during the previous coverage period would also become pre-existing diseases due to not renewing your health mediclaim insurance policy in time as the policy purchased after the due date would be construed as new policy.

Timely renewal of health covers is very important because a single day gap can prove to be a costly affair. Unlike life insurance policies, health mediclaim policies usually don’t allow any grace period for payment of renewal premium. However, there is good news. IRDA has issued new regulations recently which are applicable to all health insurance policies issued or renewed (by general insurance companies) on or after 1st June 2009.

According to the IRDA circular dated 31st March, 2009, a uniform grace period of 15 days has been made compulsory. In other words, now your health policy won’t lapse just because you delayed a payment by a few days provided you pay it with in 15 days from the due date. But, please remember that unlike life insurance where you remain covered during the grace period, health insurance claims made during this gap period won’t be allowed. Anyhow, the continuity of your existing health policy won’t suffer unlike in the past where due to delay of even just one day, your health policy was treated as fresh policy.

In a nutshell, to avoid losing ‘continuity of cover’ it is very important to renew your health / mediclaim policy in time. If there is a break in the policy, you stand to lose out many benefits which you acquire over a period of time.

Also see:

1. Health / Mediclaim Insurance - Coverage & Exclusions
2. Health / Mediclaim vs. Critical Illness Insurance
3. Health Insurance Guide
4. Understanding Life Insurance

5. Top most Amazing Fact about Life Insurance
6. Is it Complexity or Confusopoly?

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