Most insurance companies start sending renewal intimations (physical/email/SMS) before 45 days of the due date. It may be noted here that the act of sending intimations is a value-added service provided by insurance companies and they are not mandated by law or IRDAI to do so.
Thus, a policyholder cannot blame the insurance company for non-receipt of intimations and subsequently not paying the premium.
In case the premium is not paid by the due date, a grace period of 15-30 days is provided to do so. A grace period is a period permitted after the due date to renew the policy by making renewal premium payment.
The consequences of not making renewal premium payment on time are:
1) No coverage: In case a claim occurs after the due date and even if it happens to be within the grace period, it will not be entertained or paid for by your health insurance policy.
2) Renewal of policy can be denied: The insurance company can refuse to renew your policy after the grace period even if you are ready to pay the premium. Also, you risk losing the lifelong renewability feature (as per this provision laid down by IRDAI, if the policyholder regularly renews his policy, he cannot be denied/prevented from continuing the policy for life irrespective of the claim history and ailments).
3) No-claim bonus: You lose out on the accumulated no-claim bonus which is essentially a feature by which for every claim-free year, a certain percentage of the sum assured is added to your original sum assured enhancing your overall coverage at no extra cost.
4) Waiting periods re-apply: Health insurance policies usually have a waiting period of 36-48 months for pre-existing diseases. In case you do not renew your policy on time, you will be treated as a new customer and the waiting period will be re-set.
For eg: Rajesh has a pre-existing disease that will be covered after 48 months of continuous coverage. Rajesh forgets to pay the renewal premium for the fourth policy year on time. After a couple of months, he approaches the company and is ready to pay the pending premium. However, he is now treated as a new customer and the waiting period of 48 months will again apply though he had already completed 36 months of the waiting period earlier.
Similarly, certain diseases/conditions like cataract surgery, hernia, joint replacement, maternity coverage, etc usually have a mandatory waiting period of 24-48 months. The waiting period for these will also re-apply in case of a delay in premium payment.
Thus, delays in renewal premium payment can prove very costly as you end up losing several benefits that are linked to continuous or uninterrupted insurance coverage. As you grow older and acquire new ailments, it will not be easy to get a health insurance policy. So, making timely renewal payments is a wise thing to do.
Health insurance premiums can be a huge amount, so one should plan to have this amount on hand to pay on time.