What is Refund Policy in Health Insurance? Explained

Health insurance is a safety net, but things do change from time to time. You might find a better plan, be unhappy with the coverage, or just change your mind about buying it. In this case, knowing how health insurance refunds work will help you get out of a policy without losing too much money. Aside from picking the right plan, it's also important to know your rights as a policyholder.

What is a Health Insurance Refund Policy?

When a policyholder cancels their health insurance, the insurance company will return the premiums they paid. This is called a health insurance refund policy. The amount of the refund depends on when the cancellation is made, whether any claims have been made, and the policy document's specific terms. It is governed by IRDAI rules that ensure policyholders are treated fairly.

What is the Free-Look Period?

The policyholder must review the terms and conditions during the free-look period, which is usually 30 days and if the premiums are paid monthly it is 15 days from the date they receive the policy document. If you're not happy with the policy, you can cancel it and get your money back.

Before returning the remaining premium amount, the insurance company deducts the costs of the risk cover already provided, the stamp duty, and any medical exam fees.

When can you get your money back?

People usually get their money back during the "free-look" period if they don't file a claim, cancel the policy before the start date, or their employer suddenly stops paying for their group health insurance.

If an employee leaves their job during the group health insurance policy period, the proportionate premium for the remaining period may be refunded, depending on the insurer's terms.

What Deductions Are Made Before Refund?

Some common deductions are the proportionate premium for the time the risk cover was in effect, the GST paid on the original premium , administrative or processing fees, and the costs of medical checkups before the policy started.

Before you start the cancellation process, make sure these deduction terms are included in your policy.

What Will Happen If Someone Makes a Claim?

Most of the time, you can't get your money back after filing a claim and having it settled under the policy. Some insurers may refund the difference if the claim amount is less than the premium paid. This depends on the terms of the policy. People with group health insurance plans are more likely to see this than people with individual policies.