Your insurance may be due for renewal. Are you keeping track?

Some weeks ago, I took stock of my personal insurance. I had 12 policies, no less: two term plans, five health covers, two home and office policies, two motor insurance policies and a liability cover. I also have the dubious distinction of having a renewal due in every month of the year.

Keeping track of them is hard but critical. Renewing on time matters because I want to be “on risk” at all times, without any surprises. Less obviously, a break in renewal can mean losing benefits built over many years.

In term and health insurance, a lapse can lead to the insurer re-examining your health, raising the premium or declining cover altogether. In motor insurance, a break means a surveyor must physically inspect the car before cover resumes, and any damage found may be excluded. Third-party cover is mandatory, so driving uninsured is an offence. Beyond 90 days, insurers usually reset your no-claim bonus.

Liability insurance covers claims only while you keep renewing without a break. A lapse can leave incidents from earlier years uncovered, which is particularly detrimental because claims often arise well after an incident.

The grace period

Term and health policies offer some protection if you miss a renewal. Both allow a grace period for payment after the due date, usually 30 days for annual premiums. If you renew within this period, you retain the waiting periods already served and your no-claim bonus.

In term insurance, a death during the grace period is covered, with the premium due deducted from the payout. However, many health policies do not cover hospitalization during the gap, even if you renew later. Motor, home and liability policies do not have a grace period, leaving little margin for error.

A grace period helps only if you know you have missed a payment. A colleague's health insurance renewal failed because of an e-payment glitch. She found out only when she went to claim for a minor surgery. She now has a new policy but has lost all her waiting-period benefits.

Six ways to stay covered

Over the years, I have learnt a few ways to renew on time.

Set up auto-pay. You can do this through your credit card or a NACH e-mandate on your bank account. Once active, you usually receive an alert by email, WhatsApp or SMS before payment is taken. The policy renews even if you forget or miss the reminders. You simply need to ensure that the account has sufficient funds or the card has enough credit limit. Card mandates above ₹1 lakh require an OTP each time, so a large premium may not renew automatically.

Always pay electronically. It gives you proof of when you paid. With cheques, you may hand one over on time, but the agent or insurer could deposit it late.

Use your own contact details. Put your own email address and phone number on the policy. Many policies carry the salesperson's contact details or a number that is no longer in use. Insurers usually start renewal reminders about two months before the due date, with messages becoming more urgent as the date approaches. Register for WhatsApp communication, too, as policy copies are often sent through it. Then set your own email or calendar reminder for 30 days before each due date.

Keep digital copies together. Store current policies in one folder and old ones in a separate sub-folder. DigiLocker and Bima Central are alternatives. On Bima Central, you enter the insurer's name and policy number, and the app retrieves the policy electronically and sends reminders. You need to update it each time you renew, which can be cumbersome when the policy number changes every year. Either way, tell your family where the policies are stored so nominees can find them.

Prefer annual policies. We remember an event that recurs every year far better than one that takes place every three years. A multi-year health policy offers a discount and locks in the price for its term. To me, the cost of a missed renewal is far greater.

Confirm the renewal. Finally, check that the renewed policy reaches you. Auto-debits can fail and cards can expire. That is what happened to my colleague.

Many readers will be wondering, correctly, why I have so many policies in the first place. In my defence, these include base policies, top-ups and separate covers for some family members.

I am rationalizing my insurance, mainly on the health side, where some older policies are no longer meaningful. Those are my planned lapses.

Kapil Mehta is co-founder of SecureNow Insurance Broker.