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How to Cancel Health Insurance Policy and Get a Refund?

Health Insurance is an insurance plan that provides financial support during medical emergencies. There can be a time when you will have to revoke your health insurance policy for some reason. Here is how you can do it!
 

Refund

Nowadays, having insurance plans, like health and life insurance plans, is not just a choice and has become an integral part of financial planning. 
 

Health insurance provides the necessary peace of mind amidst rising medical inflation. You can focus on the well-being of your loved ones and ensure the best treatment possible without worrying about the expenses.  
 

However, there may be some circumstances when you may have to revoke your health insurance policy for some reason. In such cases, you must be aware of all your rights and responsibilities, the amount you will receive as a refund, the refund procedure, etc. 
 

In this blog, we will learn how to cancel a health insurance policy and get a refund.

Should You Cancel Your Health Insurance?

Cancelling health insurance should be a well-considered decision. Only cancel if you have a compelling alternative, like employer-sponsored coverage or a better policy. 
 

Ensure you're not left uninsured, exposing yourself to high medical costs. Assess your health needs, financial situation, and the policy's benefits and limitations. Consider life changes like relocation or employer changes that may necessitate cancellation. 
 

Always check for potential penalties or waiting periods before cancelling. 
 

Health insurance is a crucial safety net; weigh the pros and cons carefully and consult an insurance advisor if needed to make an informed decision.

Reasons for Cancelling a Health Insurance Policy

There are several things to consider before buying health insurance plans. But you can reconsider your buying decision even after purchasing a health policy. Policy cancellation can have many reasons, some more valid than others. Here are common reasons for cancelling health insurance:
 

  • Better coverage: The policyholder may find a more suitable policy with better coverage or benefits.

  • Relocation abroad: If the policyholder moves abroad and the insurance coverage is not applicable internationally.

  • Dissatisfaction with services: Unhappy with the insurer's services, such as claim settlement, coverage or customer support.

  • Policyholder's demise: In the event of the policyholder's death, the policy can be cancelled.

  • Duplicate coverage: If the policyholder unintentionally holds multiple policies with overlapping coverage.

  • Regulatory changes: Changes in insurance regulations or policies that affect the existing coverage.

  • Critical illness not covered: If the policyholder is diagnosed with a critical illness not covered by the policy.

  • Decision to self-insure: When the policyholder decides to rely on personal savings for medical expenses instead of insurance.

Understanding Health Insurance Cancellation Policy

  • Policy term: 

    The normal length of a health insurance policy is one year. Cancellation can be subject to additional terms and fees outside this time frame. You get a grace period for the renewal of this policy under the same coverage. If you miss the due date, your policy lapses. 

  • Free-look period: 

    The free-look period is the duration after policy purchase, where you can cancel insurance policy without any major premium deducted. It is 15 days for offline policy purchases and 30 days for online purchases.

  • Transferability: 

    Through the health insurance portability initiative, you can switch to another provider while still enjoying benefits from the current insurer.

  • Refund Policies:

    Usually, if you cancel your health policy within the first 6 months of the purchase, you can avail a refund. The refund policy for a cancelled health plan varies for different insurance providers.

What is a Free-look Period Cancellation in Health Insurance?

When the insured cancels the health insurance plan in the first 15 to 30 days of buying the policy, it is called a free-look cancellation. It might be because the insured is not satisfied with some of the conditions of the policy, there is a financial crisis, or some other reason. 
 

In this case, the insured will receive the complete premium amount in their refund. Some charges, like the medical check-up charges, stamp duty, and insurance risk charges, are deducted from the amount, but apart from that, you get a complete refund from the insurance company upon the cancellation.

How to Cancel Health Insurance Policy After the Free-look Period?

Once the 30 days have passed, it is called the after-free-look period. You can cancel the insurance policy after the free-look period has lapsed. However, depending on the number of days you were covered, you might only receive a portion of your money back. 
 

Different insurance companies have different refund percentages for a particular period of coverage. Given below are the common percentages of refunds based on a general study of different health insurance policies.
 

TIME (in % of the total time period covered under the Insurance Policy)

PREMIUM REFUND (In %)

25%

60%

25% - 50%

40%

50% - 75%

20%

75% and above

0%

How to Request Cancellation for Health Insurance

When you realise your policy is not completely satisfactory, you can speak with the insurance company about cancelling the same. You may have to fill out a policy cancellation form with the insurer. 
 

The cancellation process is relatively simple when you do it in the free-look period. You must completely fill out the standard health insurance cancellation policy form if given. In this form, you must fill out the reason for cancellation, the policy’s details, the date the policy was received, etc.

Health Insurance Cancellation Process

Upon receiving the standard insurance cancellation form, the insurer will contact you and try to suggest some solutions for your issues and concerns. If you want to revoke the health insurance plan even after their suggestions, you can simply follow the cancellation procedure. 
 

Here are the general steps to cancel a health insurance policy:
 

  1. Read the documents carefully:

    Always read your policy's terms and conditions carefully, especially the cancellation and refund clauses. In the cancellation aspect, different insurers have different policies.

  2. Choosing your time correctly is crucial:

    To maximise your refund, cancel your insurance at a suitable time. Cancelling during the free look period or towards the renewal date of the policy can yield better results.

  3. Initiate the Cancellation:

    When you request to terminate a policy, contact the insurance company’s support division and initiate the policy cancellation. Make sure all the communication is clear to you and your insurer, and it has to be in writing.

  4. Outstanding claims:

    To minimise complications, it is best to settle any outstanding claims before cancelling the policy.

  5. Written request:

    You must submit a formal request, either offline or online, with information about your policy and the justification for the cancellation.

  6. Process Initiation:

    After receiving your request to cancel your insurance policy for any given reason, the insurance company will work to find a solution for you. If you decide to cancel the policy, the cancellation process will start on their part. 

  7. Deductibles and refunds:

    The insurance provider will deduct the premium amount and provide refunds based on the time you were insured.

  8. Official notice of cancellation:

    You will then receive a formal letter of cancellation or an email from the insurer.

Health Insurance Refund Process After Policy Cancellation

Each insurance company has its own set of return guidelines. Also, you must consider the time between the day you purchased the policy and the day you cancelled it. That time is compared to the total time period of the coverage of your policy. The insurer also returns your premium payment after deducting the following:
 

  • Administration fees

  • The cost of a medical checkup incurred by the insurance

  • The insured is protected from the prorated premium risk for the time period.

Conclusion

You can cancel your health insurance policy if you are unhappy with the benefits provided by the policy or for any other reasonable cause. When terminating the policy, keep the aforementioned considerations in mind. 
 

If a workable option exists, avoiding cancelling your health insurance policy is usually advisable. However, you always have the option to revoke your health insurance if you are not pleased with the service. If you have a claim-free history with the insurance company and cancel the policy within six months, you may also be eligible for a refund. Additionally, choose a good life insurance plan for yourself and your loved ones to get coverage beyond medical needs.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions (FAQs)

Is it possible to cancel your Health Insurance Policy at any time?

Yes! It is possible to cancel your policy at any given time. You have to be aware of the result of your cancellation and its effect on the premiums and benefits of your policy.

What is the cost of health insurance policy cancellation?

You might want to contact your policy provider about the same. Typically, there is no cost of cancelling the insurance policy. But there might be certain service charges and other payments required.

Will I receive my premium on policy cancellation?

It depends on the time period of your policy cancellation. If you have cancelled the policy within the first 6 months, your premium will be refunded. The percentage of the premium that you will receive is completely dependent on your insurer. Contact your insurance company to know the exact percentage you will receive.

What is the best time to cancel your health insurance policy?

It is always suggested that you should never cancel your health insurance policy, but even if you do, do it within the free-look period. This gives you an opportunity to get a nearly 100% refund on cancellation.

How long does it take to receive a refund after cancelling a health insurance policy?

Refund processing times differ from insurer to insurer, but typically it requires a few weeks after the cancellation request is authorised.

Disclaimers

  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.