Unpaid Health Insurance Premiums and Credit Score

Posted on: Jun 26, 2025 | 3 mins | Written by: HDFC ERGO Team

Unpaid Health Insurance Premiums and Credit Score

Did you know that missing your health insurance payments can affect your credit score? Many people don’t realise that unpaid insurance bills matter for your credit history. If you don’t pay your premiums on time, the insurance company may involve a recovery agent or a third-party debt recovery firm to collect the dues. This information can show up on your credit report, lowering your score. It may also indicate to banks and lenders that you are unreliable with money, making it more difficult for you to obtain loans or credit in the future. Let’s understand how can an unpaid health insurance premium go against your credit score.

When Can Health Insurance Affect Your Credit?

In most cases, health insurance won’t affect your credit right away. However, if you keep missing your premium payments and don’t pay even after reminders, the insurance company might try to recover the money. In some cases, the unpaid amount can be reported to credit bureaus, especially if your policy is on EMI. That’s when your credit score can go down.

Health Insurance and Collections Agencies

If you don’t pay your health insurance premiums for a long time, the insurance company might ask a recovery agent or third-party agency to collect the unpaid amount. These are often called collection or recovery agencies. If the dues remain unpaid, it could be reported to credit bureaus like CIBIL, which can lower your credit score. That’s why it is important to pay your health insurance premiums on time, not just to keep your policy active, but also to avoid any impact on your credit.

What Happens if You Miss a Premium Payment?

If you miss a health insurance premium payment, your policy may become inactive once the grace period ends. This means you could lose your health cover along with any benefits you have built up over time. In case of a medical emergency, you would have to pay the entire hospital bill from your pocket.

In rare cases, if the amount stays unpaid for a long time, the insurer might try to recover it. If it is reported to credit bureaus, it can harm your credit score and decrease your chances of obtaining a loan or credit card easily.

Grace Periods and Policy Lapse

A grace period is the extra time your insurance company gives you to pay your premium after the due date. It usually lasts 15 to 30 days, and during this time, your health cover remains active. However, if you still don’t pay within the grace period, your policy will lapse, and you will lose your health coverage. You may also lose benefits like the no-claim bonus and the waiting period you have already completed. All this can be a hassle, so it is important to pay your health insurance premiums on time and stay protected.

How to Avoid Credit Impact for Missed Payments

The following are some tips to avoid a credit impact for missed health insurance payments:

1. Pay your premiums on time:

This is the most basic and important step. If you have health insurance, make sure to pay your premiums on time to keep your coverage active and avoid policy lapse. Timely payments ensure that you receive financial support during medical emergencies. Additionally, if your policy is on EMI, paying on time is important to maintain a good credit score.

2. Know the grace period:

Insurance companies usually provide a grace period of 15 to 30 days after the premium due date. Be aware of your health plan’s grace period and make sure to pay your premium within this time to keep your policy active and protect your credit score.

3. Inform the insurer:

If you are facing financial difficulties, inform your insurer as early as possible. They may offer temporary solutions or flexible payment options, but it is important to contact them before the due date.

Tips to Manage Premium Payments Effectively

Here are some tips to manage premium payments effectively:

• Pay on time:

Always make sure to pay your insurance premiums before the due date to keep your policy active and avoid any trouble later.

• Know your grace period:

Check your policy’s grace period and use this time wisely if needed, but try to avoid delaying your payments.

• Set payment reminders:

Use your phone’s calendar or reminder apps to get alerts before your payment is due, so you don’t forget.

• Use auto-pay:

Set up automatic payments through your bank or wallet to avoid missing payments by mistake.

• Keep track of your payments:

Regularly check your payment status and policy documents to ensure everything is on track.

What to Do if Your Premium Goes to Collections?

If your insurance premium has been sent to collections, it is crucial to address the situation promptly to prevent further financial complications. Here's a step-by-step guide to help you navigate this process:

1. Verify the Debt

If a collection agency contacts you about your unpaid health insurance premium, don’t panic. Check your insurance records to confirm that the amount they are asking for matches the outstanding premium amount.

2. Review Your Insurance Policy

Check your health insurance policy to understand the coverage, payment schedule and any unpaid premiums. This will help you spot any errors or confusion regarding your premium payments.

3. Contact the Collection Agency

Contact the collection agency to confirm the details and the outstanding amount. If you are unable to pay the full amount, try to work out a manageable payment schedule with the insurer. Make sure you get any agreement in writing. Clear communication can help you reach a manageable solution.

4. Understand the Impact on Your Credit

Having a debt in collections can hurt your credit. It can lower your credit score, making it difficult for you to obtain loans or credit cards. However, dealing with the debt quickly can help reduce the damage and improve your credit over time.

5. Pay the Premium

When your unpaid insurance premiums go to collections, make sure you pay the amount as agreed. If your insurance company still handles the debt, send your payment to them. However, if they passed your premium debt to a collection agency, you will need to pay that agency directly.

Final Thoughts on Health Insurance and Credit Impact

To keep your credit score healthy, it is important to check your credit report regularly and pay your bills and insurance premiums on time. A strong credit score can make it easier for you to get loans. It can also help you build trust with lenders and insurers and lower your insurance costs. Simply put, staying consistent with payments and keeping an eye on your credit can lead to better financial options in the future.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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