Group health insurance plans can be canceled due to various reasons from the customer’s end as well as the insurance company’s end. Group health insurance cancellation can be done during the free look period, for which the insurance company would pay the complete refund of premium subject to nil claims before the cancellation of the policy.
If the group Mediclaim policy cancellation happens after the free look period then the insurance company may refund the premium on other than a pro-rata basis or uphold the complete premium in case of claims.
The refund of premium differs from one insurance company to another. It is better to check with the insurance company beforehand on the cancellation process and the refund of the premium.
At present, the portability of group health insurance is not common in the Indian insurance market due to the many complexions involved in the portability process. The retail health insurance or personal health insurance policies can be ported from one insurance company to another by submitting a portability request form 45 days prior to the expiration of the retail health insurance policy.
In group health insurance the portability does not arise as the policy can be renewed with another insurance company at the time of renewal as there would not be restrictions that are present in a retail health insurance policy such as no claim bonus, waiting period for certain illnesses and pre-existing disease waiting period, etc.
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The following process can be followed to cancel a group medical insurance policy:
Cancellation by the insurance company:
One way to cancel a group health insurance policy is the cancellation by the insurance company. Insurance companies can cancel the group health insurance policy by giving written notice to the customer. The reasons for cancellation of the group health insurance policy by the insurance company would be:
If the customer has declared wrong information at the time of taking the group health insurance policy then the insurance company has the right to cancel the policy and even withhold the premium. The material facts should be represented correctly to the insurance company at the time of taking the policy without which the basic principle of insurance is violated.
The utmost good faith principle of insurance states that both parties to the insurance contract should declare all the material facts which can influence the insurance purchase decision. In the case of a customer, the material facts such as the previous year’s claim ratio or other material facts which impact the underwriting process should be declared to the insurance company. Any misrepresentation of these facts would lead to policy cancellation by the insurance company.
The group medical insurance policy cancellation may be done by the insurance company if fraudulent claims are reported by the customer. Fraud claims such as inflating the hospitalization bill, getting bills without undergoing treatment, and any other fraud means would lead to the cancellation of the group health insurance policy, and in certain cases, the premium may be withheld by the insurance company. The fraudulent claims would violate the basic principles of insurance and thereby lead to the cancellation of the group health insurance policy.
Cancellation by the insured:
The other way to cancel a group health insurance policy is by the insured customer. The insured customer can cancel the group health insurance policy by giving written notice to the insurance company. Insured may cancel the group health insurance policy in any of the below cases:-
If the service provided by the insurance company is pathetic at the time of claims settlement then the insured customer would be forced to cancel the insurance policy. The after-sales service of the insurance company plays an important role as the insurance is a service product that can be felt at the time of claim settlement only.
The service levels and response levels in the case of group health insurance policies are very much important to retain customers. In the case of cashless claim settlement, the response time should be very low so that the claims are approved within a short period of time by the insurance company.
Removal of Network hospitals:
The other reason for cancellation by the insured customer could be the removal of hospitals from the network hospital list. If the desired hospital of the customer is not available on the network hospital list then the customer would be forced to go for reimbursement every time which would impact the employees of the organization.
In such cases, the insured customer would go for group mediclaim policy cancellation as is not feasible and viable to go for claim reimbursement every time.
Insurance intermediaries play an important role in the claim settlement process and other service issues of group health insurance policy. If the service provided by the insurance intermediaries is not up to the mark, then the insured customer may decide to cancel the group health insurance policy and take it from some other insurance intermediary.
It is better to go with an insurance broker such as Ethika insurance company which can provide better intermediary services to customers looking for group health insurance policies. Once the policy is issued in an intermediary code it would be very difficult to change it to another intermediary code and the only process is to cancel and rebook the policy in another intermediary code.
Automatic cancellation: non-payment of renewal premium:
The other way to cancel a group health insurance policy is non-payment of premium at the time of renewal. If the customer has not paid the renewal premium then the group health insurance cancellation would happen automatically without the involvement of the customer.
The insurance company would cancel the previous group health insurance policy if the renewal premium is not received on time. Automatic cancellation of policy would happen if the premium is not paid on time and the policy would lapse. If the customer is not interested in the insurance company they can not renew the group health insurance policy leading to its cancellation.