What does Lapse Mean in a Health Insurance Policy?

A lapse in health insurance happens when you do not pay your premium on time or fail to meet basic policy requirements, which leads to your coverage ending. Once the policy lapses, you cannot use any benefits, and the insurer is no longer responsible for your medical expenses.

It is not a temporary break but a complete end of your policy. This can leave you paying medical costs on your own and may cause financial stress in the future. Keep reading to know more.

How Does the Lapse Occur?

Missing a payment deadline does not necessarily result in your insurance policy lapsing. Mostly, insurance systems have their in-built ‘safety buffer’ to protect their consumers from such accidental oversights:

• Due Date: It is the date by which you must pay your premiums to keep your policy active.


• Grace Period: In case you miss your premium due date, you have a grace period of 15 to 30 days. In this window, your policy remains active, meaning you can still honour your claims. However, you should pay the premium before the grace period closes.


• Point of Lapse: In case you miss the closure of your grace period, your policy will be officially declared as ‘lapsed.’ This is the time when your contract is voided.

What Does a Lapsed Policy Cost You?

A lapsed policy means a lack of your current coverage, and you also lose all of your accumulated rights built over the years while you were proactively paying your premiums:

• Zero Protection: In the event of medical emergencies, accidents, or illnesses, the full cost will be your responsibility. No matter if you were insured for one or ten years before, a lapse of even a day can make you vulnerable to a hospital payment of at least six figures.


• Resetting the Waiting Period: Mostly, health insurance policies have a waiting period to cover pre-existing diseases. This waiting period is usually 2 to 4 years. It also means that your waiting period resets to zero regardless of how many times you have paid your premiums before.


• Loss of No-Claim Bonus (NCB): Several insurers reward their loyal customers for healthy years. So, if you have been paying your premiums on time, there is a chance that your insurance provider might increase your sum insured or discontinue your premium.


• Medical Re-underwriting: In case you renew your lapsed policy after a significant amount of time, you might have to undergo a fresh medical check-up. In this period, if you develop a health condition, such as hypertension or diabetes, during the time you were insured, the company might exclude all those conditions or hike your premiums further.

A lapse in your health insurance is a high-stakes situation. If you are unable to pay your premium, it is always better to inform your insurer well in advance. There may be opportunities to either reduce your sum insured or opt for a different payment plan, rather than letting your policy lapse entirely.