How to Get a Refund If You Cancel Your Health Insurance?
Health insurance offers financial protection during medical emergencies. But sometimes, you may need to cancel your policy due to a change in personal circumstances, finances, or dissatisfaction with the plan.
Cancelling your health insurance isn’t complicated, but if you want a refund, there are specific rules and timelines to follow. This article explains why people cancel their health insurance, how to go about it, and how the waiting period affects your refund eligibility.
Common Reasons Why People Cancel Health Insurance
People cancel their health insurance for various reasons. Some of the most common include:
● Switching providers: You may find a better plan or more affordable option with another insurer.
● Employer-provided insurance: If you’ve recently joined a company that offers group health insurance, you might no longer need an individual policy.
● Policy dissatisfaction: Lack of coverage benefits, poor claim settlement experiences, or unclear terms often lead people to cancel.
● Financial strain: Rising premium costs or a change in financial situation can push people to discontinue their policy.
● Relocation: Another reason could be moving abroad or to a region where your current insurer doesn’t provide coverage.
Whatever the reason, it’s essential to understand your rights and the refund process clearly.
Steps to Cancel Your Health Insurance and Get a Refund
If you’ve decided to cancel your policy, here’s how you can do it smoothly and claim a refund:
1. Review the Policy Document
Start by reading your policy document carefully. Check for the cancellation clause, refund eligibility, and timelines. Insurers typically offer a free-look period during which you can cancel without penalties.
2. Use the Free-Look Period (if applicable)
Most health insurance policies in India offer a 15 to 30-day free-look period. If you cancel within this window, you are eligible for a full refund, minus any medical test costs or stamp duty charges.
Note: The free-look period is only available for first-time purchases of a new policy, not renewals.
3. Send a Cancellation Request
Draft a written cancellation request to your insurer, either via email or by submitting a form on their website or app. You must mention:
● Policy number
● Reason for cancellation
● Request for a refund (if applicable)
● Bank details for refund (if required)
Attach supporting documents like ID proof, policy copy, and cancelled cheque.
4. Get Acknowledgement
Ensure you receive an acknowledgement of the cancellation request from your insurer. This can be via SMS, email, or written communication.
5. Track Refund Status
After approval, most insurers process refunds within 7 to 15 working days. If there's a delay, follow up through customer service or grievance redressal channels.
Health Insurance Refund Scenarios Based on Timing
Your eligibility for a refund depends on when you cancel your policy:
Some insurers may deduct administrative or risk premium charges. Always clarify refund deductions in advance.
Impact of Waiting Periods on Health Policy Cancellations
There is a waiting period in health insurance policies, especially for pre-existing diseases and specific treatments. Here’s how they affect cancellations:
1. Cancelling Before Waiting Period Ends
If you cancel the policy before the waiting period completes (e.g., 2 years for pre-existing diseases), your entire waiting period resets with any new policy you take later. This is a major disadvantage, especially if you're nearing the end of your waiting period.
2. Switching to Another Insurer
When switching insurers, use the portability option instead of outright cancellation. This lets you transfer the policy and accumulated benefits, including the completed waiting period.
Tip: Always port your policy during renewal, not in the middle of the term.
3. Impact on Pre-Existing Disease Coverage
If you've already served part of your waiting period and cancelled your policy, you lose the benefit of that time. Restarting a new policy from scratch could delay your pre-existing disease coverage eligibility.
Things to Keep in Mind Before Cancelling a Health Insurance Policy
● Talk to your insurer: Some issues can be resolved by tweaking coverage or switching to a different plan within the same company.
● Avoid a coverage gap: If you're cancelling without another policy, you may face a gap in protection, which could be risky.
● Keep records: Maintain copies of all communication related to the cancellation and refund.
● Check for add-ons: Some optional riders (like critical illness cover) may have separate cancellation clauses. Understand those terms, too.
Cancelling your health insurance and getting a refund is possible, but timing is everything. The free-look period is your best chance for a full refund, while cancellations later in the policy term come with partial returns or none at all. Always understand your policy terms before taking action.
If you’re simply looking for better coverage or lower premiums, consider switching via the portability option rather than cancelling outright. Remember, health insurance is an essential financial safeguard—make changes wisely to ensure you’re not left uncovered when you need it most.
Disclaimer: This article is published in association with Go Digit and not created by TNM Editorial.