Think before you don’t renew your policy!

She was insured for 11 years with not a single hospitalisation claim but no premium discount in appreciation of a profitable customer was forthcoming. So, my friend did not renew her hospitalisation policy.

Mistake. One because she did not have a fallback policy. But, more so because, in this policy, she had accumulated something. In fact, a goldmine of invisible benefits.

The policy had accrued the maximum bonus sum insured possible due to all those claim-free years. That is, instead of a cash discount, she had been given extra insurance value for the same premium.

She had also availed periodic free or subsidised master health check-ups through the years. And her time-bound exclusions were exclusions no more since the waiting periods were long over.

In other words, the scope of her coverage had expanded over time as she persisted with the policy.

We tend to value visible rewards. But rights and benefits accumulated over time, though invisible until you need them, can be far more valuable. Not for nothing is insurance called an intangible product. It is not just a money equation of premium and claims.

Insurance Regulatory and Development Authority of India (IRDAI), the insurance sector regulator, has made this mandatory for standard hospitalisation policies without fresh medical tests.

Accordingly, your insurance company cannot refuse renewal or hike your individual premium due to your health setbacks or claims provided you have paid your premiums on time and kept the policy active.

Exceptions are cases such as proven fraud, intentional misrepresentation, false claims, moral hazard and so on.

All these benefits and the real downside of difficulties in getting new policies as age advances makes a strong case for not throwing the baby out with the bathwater.

I only wish this friend had called before her renewal or even during the grace period. She could have kept her coverage and her well-earned benefits intact. She did contact the insurer a couple of months later to renew but it was a no go. And that is as per hospitalisation policy norms.

Misreading, or not reading, her policy was a mistake. A bigger misstep was letting it lapse and losing it all. Both she and her agent lost something of value.