- Cancellation in Free Look Period
- Enjoy complete refund on Cancellation
- Policy cancellation and Processing by Insurer
Steps to Cancel Health Insurance Policy
In times such as these, especially the post-COVID era, Health Insurance should be one of your topmost priorities. Health Plans help you keep ahead of medical emergencies and the finances incurred thereof. While the need for such policies is immense, it is equally important that you be aware of the terms and conditions that come with them.
This article features important details about how a policyholder can cancel their Health Policies and the various pre- and post-cancellation formalities associated with Health Insurance in India. Policyholders can choose to cancel their insurance cover at any point in time during the coverage period without having to wait till the end of the waiting period. However, please note that the refund amount payable by the Insurance Provider is subject to when the cancellation has been done.
Should you even cancel your Health Insurance Policy?
Before cancelling your Health Policy, it is important that you evaluate your current savings, medical history and the number of dependents. Given the significant rise in Medical Inflation in the country, even the basic tests and procedures are associated with very high costs. And if you are the only earning member in the family, a family floater health plan becomes all the more critical.
In the unfortunate event that you or any of your family members is diagnosed with a critical illness, or any other Health emergency, you need a contingency in place. Therefore, we would strongly advise you to consider if cancelling a health policy in your situation is at all feasible.
Cancellation in the Free Look period
Every Health Insurance Policy comes with a Free Look period of 15-30 days, starting from the date of policy issuance. If policyholders choose to cancel their policies during this period, a sum amount of nearly 100% of the premium amount is paid to the Life Insured by the Health Insurance Provider. The Free Look period is offered solely to allow policyholders to reflect on the terms and conditions of a health plan and then decide if they want to continue with the plan for the entire duration of the policy or cancel it if they find it unsuitable to serve their needs.
Deductions in the Refund Amount
Please note that the refund amount is subject to deductions in the form of:
- The prorated risk premium for the number of days the Life Insured was covered
- Expenses incurred by the Health Insurance Company on medical examination
- Stamp Duty and Administrative charges
Cancellation after Free Look Period
You can also cancel your Health Insurance Plan after the Free Look Period of 15-30 days. However, it is important to note that in such a case, you are not entitled to receive 100% of the premium amount paid for the policy to the Insurance Provider.
- Within 1 monthIf you were to cancel your policy within 1 month after the completion of the Free Look Period, you are eligible to receive up to 75% of the premium amount paid by you.
- Within 3 monthsIf you were to cancel your policy within 3 months after the completion of the Free Look Period, you are eligible to receive up to 50% of the premium amount paid by you.
- Within 6 monthsIf you were to cancel your policy within 6 months after the completion of the Free Look Period, you are eligible to receive up to 25% of the premium amount paid by you.
- After 6 monthsIn case you decide to cancel your policy on completing 6 months of the policy term, the Insurer is not liable to pay any benefits to you.
How to Cancel a Health Insurance Policy?
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Request for Cancellation.
Once you realize that the policy bought by you does not satisfy your coverage requirements or if you find the Terms and Conditions unsatisfactory, you can reach out to the Insurance Provider. Once you communicate your request, the Insurer will ask you to fill certain forms and submit other policy-related documents.
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Processing of Cancellation
Upon receiving the request, the Insurance Company will contact you for further details. They might ask for information on the reason for cancellation, policy document and the date of receipt of the same, among others. They are also likely to suggest potential alternatives / solutions for your benefit. If they find your reason for cancellation valid, they will process the request and initiate a refund.
General Steps Involved in Cancelling a Health Insurance Policy
- Submission of CancellationYou can get in touch with the support department of the insurance provider to submit your cancellation request.
- Written Request with ReasonYou will mostly be asked to send a written request offline or online with your policy details and reason for cancellation.
- Initiation by InsurerAfter receiving the cancellation request, the insurer will generally try to provide you with a solution if you have any problems with the policy. But if you still want to cancel the policy, the cancellation process will be initiated.
- Deductibles and RefundBased on the period for which you were insured, the insurer will deduct the premium and send you the refund.
- Official Intimation by InsurerYou will also receive an official cancellation email/letter from the insurer.
Key Questions to Ask Yourself Prior to Cancelling your Health Insurance Cover
Before you cancel, you might want to keep in mind the following factors to ensure that you are making the right decision.
- Reason for CancellationIt is important to identify the underlying reason as to why you want to drop the health cover. Note that policy cancellation is subject to how valid your reason is. Some of the more acceptable reasons are death of the Life Insured, misselling of policy by agent, financial problems, etc.
- Health Insurance PortabilityA lot of Health Insurance Providers offer the option to port your existing policy to a different provider. If you have found a similar cover at a cheaper premium, you can request your current insurer to port the policy.
- Current SavingsWith the rise in medical inflation, cost of healthcare has been and will continue witnessing an increasing trend in the foreseen future. Therefore, the importance of Health Insurance cannot be undermined and if you are planning to cancel your health cover, you should have a strong financial safety net to fall back on in case of an emergency.
- Additional Health PlansIf you already have another cover to protect yourself in case of a medical illness, it is probably a little safer for you to drop an unsatisfactory insurance policy. However, make sure that you don't compromise on the coverage.
- Number of DependentsIf you have children or a spouse or parents who are dependent on you and your wellbeing, it is absolutely essential that you keep your Health Insurance Policy. Further, if there is a medical history and anybody in your family is at high-risk, we strongly advise you to reconsider your decision to drop the plan.
- Refund AmountWhen you have firmly decided to cancel your Health Policy, it is advisable to check the amount of refund you will receive. If it is negligible, you can wait till the grace period of 30 days. If you don't pay your premiums to renew your existing health policy within the 30 days grace period, your policy stands cancelled automatically.
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Steps to Cancel Health Insurance Policy:FAQs
1. Can I cancel my Insurance policy and get my money back?
If you have paid your premium and canceled your policy before the end of the term, the Insurance Company is obligated to refund the remaining balance based on the validity of the circumstances. Please read the article for more clarity or reach out to your Insurance Provider.
2. Can I cancel my Health Insurance anytime I wish to?
While it is advisable to not drop a Health Insurance policy, you have the liberty to cancel it at any point in time during the policy period. However, please note that the refund amount will differ based on when the policy was cancelled.
3. What is the difference between grace period and free look period?
Free Look period is offered at the start of policy inception. It ranges from 15-30 days and if policyholders find the Terms and Conditions of their policy to be unsatisfactory, they can cancel the policy and receive 100% of the premiums back. On the contrary, Grace Period is offered at the end of the policy term to allow policyholders time to renew their policies. It is mostly fixed at 30 days by Health Insurance Providers in India.
4. Will I get a full refund if I cancel my Health insurance after the free-look period?
No, when you cancel your policy after the completion of the free-look period, you will not get a full refund. The company will charge a cancellation fee (varying from insurer to insurer), and will then refund the remaining amount.
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Written By: Naval Goel
Naval Goel is the Founder and CEO of PolicyX.com (IRDA- Approved Insurance Comparison Website). He is a CFA charter holder (USA) and FRM (GARP). He holds an MBA from IIFT, Delhi, and is also an Associate from the Insurance Institute of India. Naval is an avid investor and entrepreneur who has a deep understanding of the Indian equity market and insurance sector. He has been investing for more than 10 years now and is a CFA charter holder.
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