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What is a lapsed policy in health insurance?

Roocha KanadeJul 2, 2025

Lapsed policy in health insurance can cause issues when you face medical emergencies. It can result in the loss of coverage and you may find yourself in a challenging situation, financially. Thus, it is important to understand what lapse policy is in health insurance, the causes, and possible ways to avoid them to ensure continuous health coverage.

Contents

Understanding a lapsed policy in health insurance
How does a lapsed policy in health insurance work?
How to avoid health insurance policy lapse?
Common causes of policy lapse
Can a lapsed health insurance policy be reinstated?
The bottom line
Frequently Asked Questions

Understanding a lapsed policy in health insurance

Now let's understand what is lapsed policy. A policy lapse happens when you miss to pay the premium amount for your health insurance plan. This can lead to the termination of your entire health insurance coverage. As an insured individual, you may lose all the benefits associated with the policy, including coverage for medical expenses.

How does a lapsed policy in health insurance work?

Understanding what does a policy lapse mean is crucial to avail health insurance coverage. Health insurance plans usually offer a grace period of 15 days. The policy lapses if the premium payment is not done within this timeframe. You will not be able to raise a claim, use cashless hospitalisation, or get other policy benefits, unless you renew your policy. In short, you will lose the advantages of having health insurance when the policy lapses.

How to avoid health insurance policy lapse?

Preventing a policy lapse is essential for maintaining continuous health coverage. Here are some strategies that you can follow to avoid a lapsed policy in health insurance.

Set up automatic payments: Create auto-debit options to ensure premium payments are made on time.
Regular reminders: Use calendar alerts on mobile applications to remind you of upcoming health insurance premium due dates.
Update your contact information: Ensure your insurer has your current contact details so that you can receive notifications from them on time and avoid facing last-minute changes.
Understanding the policy terms: Understand the grace period and other types of relevant terms from the insurance company to avoid facing an unintentional policy lapse in health insurance.

Common causes of policy lapse

Following are some common factors that can lead to a policy lapse in health insurance.

Financial constraints: If you cannot afford premium payments due to certain financial hardship.
Negligence: Forgetting to clear payment for premiums or misunderstanding the payment schedules.
Changes in bank details: Failure to update contact details with the insurer or auto-debit information after changing your bank accounts. A change in contact information may lead to missing an alert.

Understanding and working on these reasons will help you prevent facing an unintentional lapse in insurance.

Can a lapsed health insurance policy be reinstated?

Reinstating a lapsed health insurance policy is possible, but it involves following certain conditions. Some health insurance companies allow reinstatement after the grace period, yet it might require the following.

Providing evidence of insurability through questionnaires or medical examinations.
Settling the unpaid premiums with possible penalties and interest.
Go through waiting periods to gain back insurance benefits.

Contact your insurer to understand their reinstatement process and the steps you must follow to apply for a lapsed policy refund.

The bottom line

A policy lapse usually happens due to non-payment of premiums, especially beyond the grace period. It will lead to a loss of coverage and other benefits. You can prevent lapses by setting up automatic payments, remaining informed about the policy terms, and maintaining open communication with the insurer. Once you understand the lapsation meaning in insurance, you can follow the requirements and waiting periods for reinstatement.

Frequently Asked Questions

In this section, we will go over some of the most frequently asked questions about lapsed policy in health insurance

What causes a health insurance policy to lapse?

A policy lapse in health insurance occurs due to non-payment of premiums. It can also happen due to auto-debit failures, incorrect contact details shared with the insurer, or forgetting the premium due date.

Why did my health insurance policy lapse?

Your policy might have lapsed as the premium amount was not paid from your side within the grace period. This could happen due to financial hardship, system errors, or forgetting the premium due dates.

Will I lose all the benefits if my policy lapses?

Yes. Once the policy lapses, you will lose access to coverage and claims, and even face lapsed policy refund complications.

What is the grace period in health insurance?

The health insurance grace period is the extended time the insurer gives you to clear the policy premium payment. The grace period usually ranges from 15 to 30 days. Your policy will lapse if payment is not made within this time frame.

Can I file a claim if my health insurance policy has lapsed?

No. A lapse in insurance means that your health insurance policy is inactive. The insurer will reject any claims made during this period. Always ensure to clear your premiums on time to keep the policy active.