What Is Grace Period In Insurance?
Mini Balakrishnan
It is essential to stay insured all the time for your health as we all are uncertain about when we might fall sick. We all need medical care at one point in life or the other. So it’s very crucial to renew your insurance policy on time or even before the due date.
Every health insurance policy is valid for one year, and the insured is supposed to renew the same for the preceding year at the end of the tenure of the policy. But if you fail to renew your health insurance policy on time, there is always a chance provided by the insurance company to finish the procedure. This is the Grace Period given for the renewal of your health insurance policy.
What is Grace Period in Insurance
Grace Period is the extra relaxation time the insured gets to renew by paying the renewal premium but still he doesn’t lose on the benefits that he was getting from the existing insurance cover.
The Grace period for most insurance companies varies. It can be a week or even 30 days. However, if you still keep extending and fail to pay the renewal premium before the grace period ends then your policy will automatically lapse or expire. You will also lose all the benefits you’ve been getting while the policy existed.
Grace Period Vs Waiting Period
Grace period always gives you extended time to pay your renewal premium even when you get over the actual renewal dates. But there is something called Waiting Period which generally gets confused with Grace Period by many people. The waiting period is the waiting time under a policy to make claims and to get benefits as mentioned in your specific insurance by the respective company.
Grace Period For Different Types Of Insurance Plans
We shall look at the different types of Insurances and their respective Grace Periods.
| Type of Insurance | Grace Period |
| Term Insurance | Premium payment Annual- 30 days. Premium Payment half yearly- 30 days |
| Health Insurance | 15 days from the due date of Renewal |
| Car Insurance | Between 30 to 90 days depending on the Insurance Company |
Term Insurance Grace Period
Grace periods are available in all types of insurances to provide the insured some time to pay their renewal premiums in case they were not able to pay on the exact time of the renewal date. The IRDAI provided an additional number of days for these kinds of policies which is normally 30 days from the renewal date.
Usually, people pay the premium in two to three ways for their insurance policies. Some might be able to pay a lump sum amount as a single-time payment, others will be paying in other ways like quarterly, monthly or half-yearly. The grace periods differ in the type of payment.
For monthly payments, the grace period is available only for 15 days while the rest of the payment methods have a benefit of 30 days. However, the policy will automatically go into lapse mode if the insured still doesn’t pay within the grace period provided by the insurance company.
Health Insurance Grace Period
It is highly recommended that you get a health insurance plan that offers a maximum grace period so that you will get more time to renew your policy if there are genuine failures of payments during the exact date of renewal. The policy wordings will mention the exact time offered by the insurance company as the grace period.
The health insurance grace period for payment is the same as other grace periods like life insurance policies. It varies from 15 days to 30 days depending on the insurance company and the type of health insurance policy that you have bought. Some insurance companies do not have an option of grace periods. It’s always good to check this thoroughly before buying the plan if you are a busy person.
Some health insurance companies charge a higher renewal premium during grace periods in case you missed the payment of the actual premium during renewal. However, the companies charge higher premiums only if the policyholder misses his renewal dates very frequently. Like other insurance policies if you miss paying the premium even during the grace period your policy will go into automatic lapse or expiry.
Apart from the policy getting lapsed, it becomes a bit more complicated if you miss paying the renewal premium even during the grace period. Some insurance companies deny the coverage benefits if there is any health-related emergency or hospitalization. Some companies would also need you to go through the pre-medical screening before issuing a second policy as the first one got lapsed which might put you in a tight spot with being denied the cover during an emergency or the new policy may even charge much higher than the one that existed.
Car Insurance Grace Period
Though all insurance policies have grace periods it is not legally advisable to keep your car insurance without renewing it on time. But still, some insurance companies do provide grace periods even for Car insurance plans to renew their policies without losing their benefits. The insurance companies sometimes exclude certain cover benefits during the grace period as they are legally not liable to pay the insurer after the actual renewal date.
A car insurance policy like other insurance policies is valid for 12 months and it’s advised under IRDAI that all four-wheeler vehicle owners are required to renew their insurance before the respective expiry dates. Normally a car insurance grace period in India is 15-30 days.
When you fail to renew the policy the policy automatically gets lapsed and you might have to face legal and financial consequences like :
- No protection for your Car and in effect you can’t raise any claim with the insurance company in case of any unfortunate event.
- You lose your NCB that you might have earned as a reward.
- You will be inviting legal consequences for driving a four-wheeler without a valid insurance cover as required by the law. You might even end up in prison.
- The vehicle will be subject to re-inspection when you try to take a new insurance policy after the previous one got lapsed.
- You will not be getting any third-party liability coverage in case you get into injuring them or their property without insurance in place.
The availability of a grace period for Car Insurance should never be taken for granted as the legal and financial consequences will be more than you can imagine as you never can predict any unfortunate circumstances.
Top Insurance Companies And Their Grace Periods
| Name of the Insurance Company | Grace Period |
| Star Health Insurance Grace Period | 30 Days |
| Sbi Life Insurance Grace Period | 15 days for monthly mode of premium and 30 days for other modes like yearly, half yearly and quarterly |
| Hdfc Life Insurance Grace Period | 30 Days |
| Religare Health Insurance Grace Period | 30 Days |
| Aditya Birla Health Insurance Grace Period | 30 Days |
| Max Bupa Health Insurance Grace Period | 15 Days |
| National Insurance Grace Period | 30 Days |
| LIC Term Insurance Grace Period | 30 Days and 15 days for monthly premium payments. |
What would you do if you forgot to renew your Travel Insurance policy? Imagine you are in another country for a holiday. Unfortunately, travel insurance does not have a grace period past the renewal date but you can always choose to extend your travel insurance policy up to 180 days by most insurance companies.
Its always a boon to have Grace Period in your insurance policies to keep all assets protected and keeping all benefits you earned. But, it’s highly recommended to renew the policies on time if you remember the renewal dates. The insurance companies usually remind the policyholders. This is to avoid any form of forgetting to renew even after the Grace Period given to you. Better to remain on the safer side and use the relaxation period only when you have any unavoidable emergency situations.
