Consequences of Non-Payment of Health Insurance Premium
It is important to know about the things that can happen if the medical insurance premium is not paid so one can realize its seriousness. So, let us understand why paying the premium on time is so vital.
Insurance companies provide a 30-days grace period before lapsing the policy if the premium is not paid on time. However, IRDA Health Insurance Regulations specifically states, that there will not be any insurance cover during this period. You might miss out the tax deduction under Section 80D of the Income Tax Act.
Five Tips on How to Plan Your Health Insurance Premium Payments
Now, as you are aware of the few consequences of failure to pay the insurance premium, let us understand some tips to plan the payment of the premium on time.
Before buying health insurance for senior citizens or for the entire family, analyze the need and requirements and check the policy accordingly. In addition, check the amount of the premium you will need to pay. You can explore your options by doing sound research and finding cheap health insurance with good features and coverage. The most vital thing to keep on the wheel is that you should be comfortable in paying the premium every year, and it should not become an unnecessary burden on you under any condition. Calculate you quotes using an online health insurance premium calculator to choose a policy that meets you budget and requirements.
Include this expense in your annual budget
While preparing the yearly budget, do not forget to include this cost at the outset of the year. It requires a careful cash flow planning to ensure you’re not short of funds then. The best way to maintain the cash flow without facing difficulties is to save money every month. By doing this, you will create a habit of saving funds for the premium which will help you in the long run.
Maintain an emergency fund of at least six to twelve months
In financial planning, one of the core tenets is that you should have a contingency fund of 6-12 months of your fixed monthly obligations saved in a fixed deposit or a liquid mutual fund. As the annual health insurance premium is not a small expense when it is due, you can make use of your contingency fund. Later on, you can fill up the fund again when you have an inward cash flow. Contingency fund acts as liquidity support for the entire cash flow of a month against these expenses.
Put up two reminders
It is always beneficial to plan the funds in advance before the insurance renewal date of the policy. It is best to set up a reminder for this expense, so to avoid the lapsing of your policy. You can set two reminders. The first reminder will take notice of the expense, plan for the funds and payment of the premium. The second will be your warning bell if the due date is near and you have not made the payment.
Credit Card Option
This is a last resort and must be used wisely with due consideration as being unable to pay the bill of credit card in the next month, you will be charged with interest and penal charges. In addition, this will also damage your credit score.
A health insuranceprotects your savings from the financial impact of a medical emergency. You might also receive benefits for uninterrupted renewal of the policy.