Can the Insurer Decline to Renew my Health Insurance Policy?


Vector image - person looking to the sign of hospital and thinking can the Insurer Decline to renew my Health Insurance Policy

Insurance policy renewal is the most important thing for any customer. Personal health insurance renewal would be done by the customer just before the expiry of the policy to prevent the policy from lapsing. Insurance renewal happens every year for most insurance products except for long-term insurance policies, where the insurance premium is paid for more than a year. Health insurance policies for more than one year would not be renewed every year.

Let us understand the reasons why an insurer can decide to decline the renewal of your health insurance policy:

Fraud Claims:

The health insurance company would decline to renew your health insurance policy if you had made fraud claims in the preceding year. The fraud claims would not be encouraged by the insurance companies, and the renewals would be rejected outright by the insurance companies. Fraudulent claims can happen when the customer claims health insurance without hospitalization or increases the claim amount by fraudulent means.

Fraud claims are the reason for the increase in the claim ratio of health insurance companies. Fraudulent claims can result in legal action against the customers and a refusal to renew the health insurance policies. The insurer would deny the renewal in the case of fraudulent representation of claims. Fraudulent claims can happen when the insured customer gets treated at a known hospital and inflates the hospitalization bill to claim undue benefits from the insurance company.

Misrepresentation of material facts:

The other reason why the insurance company can reject the renewal of an insurance policy is if it finds out that the material facts are misrepresented by the Customers. Misrepresentation of material facts would be taken seriously by the insurance companies as they can result in increased claims.

Material facts decide the insurability of the proposal. Misrepresentation of material facts would be verified at the time of claim settlement or during subsequent stages. As per the basic principles of insurance, insured customers should declare all the material facts to the insurance company under the utmost good faith principle.

Material facts in health insurance are the deciding factors for acceptance of the proposal. Material facts include the pre-existing diseases of the insured, and health conditions that form the basis for insuring the proposal.

Discontinued product:

The other scenario in which the insurer can decline the renewal of an insurance policy is when the insurance product is discontinued by the insurer. If the insurance product is discontinued then the insurer would ask the insured customer to take a new product near to the discounted product.

In place of the discontinued product, the new health insurance product would be offered to the customer which can be renewed by the insured customer. The discontinued products cannot be renewed by the Customers. In case of discontinuation of a health insurance product, a new health insurance product with more or less similar coverage would be provided to the insured customer.

Break in renewal:

The other reason when the insurance company refuses to renew your health insurance policy is when there is a break in the renewal of your health insurance policy. If the policy is not renewed before the expiry, then the insurance company would refuse to renew the health insurance policy.

The option to renew or reinstate the policy depends on the decision taken by the insurance company. Insurance companies are not legally liable to renew the policy after the expiry of the policy. Sometimes insurance companies might ask the customers to undergo a medical checkup and submit the reports to the insurance company to determine the renewability of the proposal.

Senior Citizens Health Insurance Renewal:

The other scenario when a top health insurance company can decline to renew the insurance policy is if there is a breaking in the renewal of the policy and the age of the customer is more than the permissible age to enter mentioned under the policy.

For instance, if the maximum entry age in an insurance policy is 65 years and the customer has not renewed his policy after crossing 65 years then the insurance company would decline the request to renew the policy of the customer.

This is because the maximum age for entry under that particular policy is less than the age of the customer. The other option for the customer is to purchase another policy and satisfy the waiting period conditions before making a claim under the policy.

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Susheel Agarwal

Namaste. I'm Abhinay Nedunuru, a Fellow of the Insurance Institute of India with a passion to make insurance simple and crisp. I write on insurance and investment. I have a passion for teaching and training in particular to insurance. I'm currently doing my PhD from IIM in Management.