If you’ve recently bought an insurance coverage, congratulations to you! However, before you get too carried away, please note that it is equally important to renew the policy on time and in a proper way.
Hence, in today’s article, let’s discuss some tips on some pointers you should be aware of at the time of renewing a health insurance policy.
1. Renew Well Before Due Date
If you do not pay your health insurance premium by the deadline, your insurer will provide you a 30 day grace period before lapsing the policy. However, Health Insurance Regulations specifically provide that there will not be any insurance cover during this time.
Also, you can lose out on the benefit of lifelong renewability provision as per the mandate of IRDA health regulations. Similarly, you might also miss the credit of waiting periods for pre-existing diseases as well as the specified waiting periods for certain illnesses and the tax deduction under Section 80D of the Income Tax Act (assuming you do not pay the premium in the whole of the financial year).
Though insurers follow a practice of sending a renewal notice to policyholders, as per the law, an insurer is not bound to provide any such notice. Hence, you should have a proactive setup reminders for the due date.
Since the premium amount can be considerable, you should plan for the funds in advance, so as to avoid the last minute financial hassle.
2. Change the Policyholder if Required
If you pick up the policy wordings of a health insurance policy & closely look at the policy terms and conditions, you can find that insurers allow for a change in policyholder only at the time of renewal. So, as per the wordings of Section 80D, you can only claim a deduction for policies taken for your parents. In such case, a good tax planning strategy is that husband and wife can pay separately for their respective parents and claim deduction for parents in their individual tax returns.
Another tax planning strategy in such a situation is that the husband can be the proposer in the policy containing only him, and his wife can be a proposer in a policy consisting of her & kids. That way, both husband and wife can claim tax deductions in their separate returns.
3. Review the Health Insurance Requirement
When it comes to personal finances and insurance, it is crucial to set up a process. Since a critical checkpoint here is to review the health insurance requirement, you can fix up the time around renewal to consider your need.
Why is this necessary? Because there might have been some changes, that took place since last year.
For e.g. there is a child birth in the family, an old family member covered under insurance might have expired or you might have changed jobs. Unlike your former employer, the new employer does not cover you under group insurance plan. And of course, there is a year on year increase in medical cost by 12-15%.
Policy renewal is a time where you can adjust your health insurance coverage to suit your family’s financial needs. In the case of a change in details on dependants (add a new child/remove an expired member), all those can be done at the time of renewal.
4. Increase Sum Assured Under the Policy
After a review of the insurance requirements as mentioned above, if you are sure that the sum insured needs to be increased, the same can be done only at the time of renewal. Also, the insurer may impose conditions like no claim history and requirement of medical tests if the requested enhancement is significant.
Note that the waiting periods will apply afresh for the increased portion of the sum assured. So, you should be mindful and prepared about that at the time of renewal.
5. Explore a Super Top Plan
It may so happen (and is true especially for old and PSU insurer policies) that your sum insured is almost equal to the maximum coverage allowed under the policy.
In that situation, you do not have the option to increase the sum assured under the policy. At that point, you can explore a super top up plan from the same insurer (preferable so as to ensure dealing with only one insurer at the time of claim) or else another insurer.
6. Check if there is Any Change in Policy Terms & Conditions
The policy terms and conditions remain the same at the time of renewal and as per the IRDA regulations; insurer cannot change that basis an adverse claim experience. As per IRDA regulation, any change in benefits or premium can only be done with the approval of IRDA and has to be informed to the insurer at least three months before renewal.
In such a case, if the revised terms are not acceptable, you have the option to migrate to another similar policy with the same insurer or to port the policy to a new insurer as per the IRDA portability guidelines.
7. Disclose any New Illness/Condition
Health insurance is a yearly contract hence renewal is in substance a fresh contract, on the same terms and conditions as were in place in the last year. However, during the year, there may be material changes in your health profile.
If you closely read the policy terms and conditions, it is mentioned that though the insurer will not load the policy due to adverse claims experience (it cannot given the IRDA regulation), it can call for documents/information before agreeing to renew the health insurance policy.
Now, unless the insurer asks, there is no express requirement from the insured end to disclose these changes. However, on the safer side and holding the spirit of the principle of utmost good faith, it is advised to inform the insurer of the same. Let it take a decision on your policy accordingly, rather than face the pain of rejection at the time of claim.
8. Preserve Receipt & Update Your Spouse about Renewal
Once you pay the renewal premium, you should also update your spouse/senior family member of this fact so that they are aware of the same and not caught unaware at the time of the claim. You should also follow up with the third party administrator (TPA) to issue the revised cashless identification cards and then tell your spouse where the insurance documents, cards, etc. are kept.
Additionally, since you’ll claim a tax deduction on the premium, it is advisable to take a printout of the receipt and put it in your tax file, for the record and future reference.
Usually, people think that by buying health insurance, they’ve done everything, but that is a wrong approach. Renewing insurance in time and that too, in a proper and timely way, is as necessary as buying the right health insurance.
And since there are some things like sum insured enhancement and change in proposer details that one can do only at the time of renewal, a planned and thought out approach to insurance renewal is beneficial than a last minute rush.