Grace Period in insurance

What Is a Grace Period?

4th March 2021 8min read 872 views

Everybody knows that having insurance is vital. Most people have comprehensive car cover and a good health insurance plan for themselves and their family members. But, understanding the various words and phrases used by insurance companies isn’t always easy. One such term that we’re sure you’ve come across is ‘grace period’. In case you aren’t sure what it means, we’re here to help.

Grace Period

A grace period is a given time, immediately after the premium due date, during which insured individuals can pay their premium without losing continuity of cover. We can understand this better with an example. Let’s say you have a purchased a policy from a health insurance company on 8th June 2020. The policy is set to expire at 23:59 on 7th June 2021. If you don’t renew your premium before the policy expires, your cover will expire immediately. But, you have a grace period of 30 days. So, you have until the 7th of July 2021 to pay your premium and simply ‘renew’ your policy instead of purchasing a new one. You can continue to enjoy cover under your policy without any breaks. Continuity of cover is crucial for health insurance specifically as new policies come with long waiting periods during which claims cannot be raised. The grace period offered differs depending on the kind of policy and the insurance provider.

Grace Period Claims

Claims that you raise during this grace period are slightly different than regular ones. If you raise a claim before paying the premium, the claim will not be entertained. However, claims that you raise after paying the due premium will be settled under your new policy. Once the premium payment comes through, your new policy will come into effect and your insurance provider will settle all claims as usual.

Renewing Insurance on Time

Many people tend to put off renewing their insurance until the last moment as they assume it’s a long and cumbersome process. In reality, this isn’t true. In today’s digital world, renewing your policy, be it health or a general motor insurance plan, is incredibly easy. You can visit your insurance provider’s website and quickly renew your policy online. If you haven’t made any claims and want to continue with the same plan, you can make an online payment and have a soft copy in your email inbox within minutes. If you complete the process just before your premium is due, you can continue to enjoy all your benefits, including your no-claim bonus and other discounts. On the other hand, if you wait until your policy lapses, you may have to prove that your car or house is still in the same condition and your policy should be renewed with the same terms and conditions.

Your insurance provider offers you a grace period to ensure that you are never left without the coverage you need. But, you must not rely on the grace period regularly. You should always renew your policy in time to enjoy continued cover without any issues.

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