Letting a health insurance lapse can cost hidden benefits

Dropping a hospitalisation policy without expert advice can forfeit accumulated bonuses, completed waiting periods, and lifelong renewability rights, The Hindu reports. A person insured for 11 claim-free years did not renew and lost the maximum bonus sum insured, free health check-ups, and the expiry of all time-bound exclusions. The insurer refused to reinstate the policy a few months later, as per standard norms.

The Insurance Regulatory and Development Authority of India (IRDAI) mandates lifelong renewability for standard hospitalisation policies without fresh medical tests. Insurers cannot refuse renewal or hike premiums due to health setbacks if premiums are paid on time, except in cases of fraud or misrepresentation. Buying a new policy after a lapse means starting from scratch: fresh underwriting, possible medical tests, restricted cover, higher premium, and new waiting periods for pre-existing conditions and specified procedures.

The Hindu notes that persistent policyholders accumulate invisible value beyond premium-claim arithmetic, including loyalty benefits and the ability to layer top-up covers. The writer advises consulting an expert before dropping any policy, as the downside grows with age and deteriorating health.