What is reinstatement of health insurance?

Posted on: Aug 1, 2023 | 3 mins | Written by: HDFC ERGO Team

What is reinstatement of health insurance?

Life can throw many curveballs and sometimes, the financial situation can suddenly get worse. Well, during times of financial crunch, renewing health insurance policy may not stay on someone’s priority. And once you miss the deadline, unfortunately, the result will be a lapse of coverage, leaving the policyholder vulnerable to unforeseen medical expenses. But things can improve with time and that’s where the option to reinstate your health insurance policy can come in handy. So, what is reinstatement in health insurance?

What is the Reinstatement of Health Insurance?

When you restore your health insurance policy with the same terms and conditions after the policy has lapsed or cancelled, it is called reinstatement in health insurance. If the insurance premium is not paid on time, you get a grace period of 15-30 days (depending on the insurance provider) to make the payment while still being covered by the policy. However, if you miss the grace period also, the policy will lapse and you will be left with no coverage. Reinstatement allows you to revive the lapsed policy and regain the same benefits and coverage without having to purchase a new one.

When Does Reinstatement in Health Insurance Occur?

Health insurance plans come with an insured amount, for which they provide coverage to people. For example, if you have taken a policy for ₹5 lakh, you can get coverage only up to this amount.

With the rising number of health issues today, there could arise situations where you submit multiple claims for your healthcare requirements. If you have exhausted your coverage amount through these claims, you can resort to the option of reinstatement of health insurance.

Also, if your policy has lapsed, you have two options: either revive or reinstate the policy or purchase a new one.

By requesting reinstatement, you can update your policy with the same coverage amount and get protection for future medical expenses. However, reinstatement comes with certain terms and conditions that you should be aware of.

How Does Reinstatement Provision in a Health Insurance Work?

Reinstatement is applicable for all plans, including family health insurance policies. If you have used up the entire coverage amount of your policy even before its expiry, you will not have any protection for the medical expenses you may encounter in the future. With no coverage amount to guard you, you will have to pay for these expenses out of your pocket.

When you run out of your coverage amount, you can contact your insurance service provider to reinstate the original value under the policy. The insurers assess your request based on various factors and may accept or reject your reinstatement proposal, as the case may be. Always read the reinstatement terms mentioned in your policy document carefully to avoid any ambiguity in this matter.

How is Renewing a Health Plan Better Than Reinstatement?

Renewing a health plan is a better option than reinstatement in health insurance and here are the reasons why:

1. It takes only a few minutes to renew your policy online. On the other hand, reinstatement in health insurance may take a few days. You have to send a reinstatement request to the insurance provider who will, then, check if you meet the eligibility criteria. If you are eligible, your lapsed policy will be revived.

2. No reinstatement fee in case of policy renewal.

3. You will have uninterrupted coverage by renewing your policy. This will protect you from unexpected hospital expenses.

4. No additional charges or penalty when you renew your policy. You will have to pay only the applicable premium.

5. There will be no change in coverage when you renew your insurance policy.

Role of Grace Period in the Reinstatement of a Health Plan

All insurance policies, whether health, mediclaim, or motor, have to be renewed on time to avail of the coverage benefits. If, for some reason, you miss paying the premium before its due date, you will get a grace period during which you can make the missed payment and avoid a lapse in coverage. The grace period varies from 15-30 days depending on the insurance company. However, if you fail to renew your policy during the grace period also, the policy will lapse and you will be out of coverage. Usually, insurance providers send reminders and notifications at least 15 days before the policy expiry date to ensure you don’t miss the renewal.

What Happens if You are Unable to Pay the Outstanding Premium?

If you are unable to pay the outstanding premium within the grace period, it will lead to cancellation of your policy. This means, you are no longer covered by insurance and any unexpected medical expenses during this period will be borne by you unless you have a backup health plan. This can deplete your savings. So, once your policy has lapsed, there are two options – reinstate your policy or purchase a new one. For reinstatement in health insurance, you have to contact your insurance provider requesting for restoration of your policy with the same terms and conditions. You may have to go through some process and formalities and there may be some change in your coverage or premium.

How to Revive a Lapsed Health Insurance Policy?

The first step to do for reviving a health insurance policy which has lapsed is contacting your insurance provider and requesting for reinstatement. If the insurer finds your case to be legitimate, it will help you with the details, including fees and other charges, to revive the policy. If the lapsed policy cannot be revived, you can consider buying a new one. Before buying a policy, research and compare the different policies available and choose the one that meets your needs and budget.

Can Reinstatement be Denied?

Policy reinstatement is at the discretion of insurers, and they can deny reinstatement due to the following reasons:

1. Non-payment of premiums

If your policy has lapsed because you have not paid multiple premiums and are unable to pay the outstanding premiums along with penalty and other charges, the insurance provider may deny reinstatement.

2. Change in your medical condition

If there has been a significant change in your health condition since the policy was issued and the insurer considers you high risk, there are chances that your policy may not be reinstated.

3. Misinterpretation/fraud

If the insurer finds out that you have misinterpreted facts or engaged in fraudulent activities at the time of buying a policy or filing claims, reinstatement may be denied.

4. Policy cancellation

If your policy has been cancelled or terminated due to non-payment of premium or other reasons, then the insurer may not reinstate your policy.

Conclusion

If your health insurance policy expires due to non-payment of premium, you will still get a grace period to make the payment. But if you miss the grace period, the policy will lapse and you will no longer be covered. At this stage, there are two options for you – revive or reinstate your policy or purchase a new policy. Understand what is reinstatement, check the pros and cons of both options and choose the one that is suitable to you. Make sure you secure yourself and your loved ones with health insurance policies for financial security during a medical crisis. While buying a health plan, check the waiting period of pre-existing and other ailments and choose the insurer that has a smaller waiting period. Family health insurance is ideal if you are a nuclear family or a family of four members.

FAQs

1. Is there a reinstatement fee if I revive my lapsed policy?

In some cases, the insurance provider may charge a one-time reinstatement fee for reviving a lapsed policy. This fee may vary depending on the health insurance plan and insurance provider.

2. Will I get the same coverage after reinstatement of my lapsed policy?

In most cases, yes, your coverage will remain the same. However, it also depends on your present medical condition, the type of plan, and the insurance provider’s terms and conditions.

3. Is there any timeline to reinstate lapsed health insurance policy?

Usually, there is no timeline, but some insurers allow reinstatement within 6 months of policy lapse. Also, you should meet the criteria for reinstatement. If you cannot pay the outstanding premiums, your lapsed policy cannot be revived.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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