Case 1: When you are hospitalized just before the policy expiry date and have intimated the insurance company about the same before policy lapses (where the policy lapses while you are still in hospital), the company will pay the benefit as per the plan, and its terms and conditions.
Case 2: If the policy lapses and you are hospitalized during the grace period, on intimation during the grace period about the hospitalization, the company will pay the coverage as per the plan, and its terms and conditions.