Health Insurance Refund Policy

Mr. Roy purchased a health insurance policy for himself from a private insurance company. He got carried away with the low premiums that he was required to pay for the policy and purchased it in haste. However, after 10 days, he realised that the policy which he has purchased isn’t offering adequate coverage and now, he wanted to cancel the policy and get a refund of the premium paid by him.As per the Insurance Regulatory and Development Authority of India (IRDAI) , all health insurance policies come with a free-look period of at least 15 days from the date of policy issuance. If the policy has been purchased online, the mandatory free-look period is of 30 days.In case the policyholder is unhappy with the policy during this free-look period, he/she can cancel the policy and ask for a refund of the premium paid by him/her from the insurance provider.Upon receiving the policy cancellation request, the insurer will have to refund the entire premium amount to the policyholder after deducting the costs incurred by it on medical tests and stamp duty. The insurer may also deduct the proportionate risk cover charges for the days during which the policy was active.

If you’re fully convinced the policy terms does not meet your expectations or requirements, you can cancel your health insurance policy anytime during the free-look period. For this, you need to inform your insurance provider about your wish to cancel the policy in writing. Some insurers may ask you to fill a cancellation form where you have to provide policy details, buying date, and your reason for cancellation etc.After receiving the cancellation request from you, the insurance provider may get in touch with you to know the reason for cancellation and try to provide solutions. However, if you still wish to cancel the policy, the insurer will have to do so and process the refund of the premium paid by you.

Some insurers allow the policyholders to cancel their policy even after the free-look period. However, in such a case, they are not entitled to receive 100 percent refund of the premium. Usually, if a policy is cancelled within a month of its purchase, the refund is 75%. Whereas, if it’s cancelled within 3 months, 50% of the premium amount is refunded. To conclude While it’s not wise to cancel a health insurance policy after its purchase, you can do so if you have valid reasons. However, before cancelling the policy, it’s wise to evaluate whether it would be a good idea to opt out of the coverage or not.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.