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Policy and Checklist for Claiming Group Health Insurance Refund in India


Summary

Vector Image Person Standing Next to the Board - Policy and Checklist Claiming Group Health Insurance Refund in India

A group health insurance policy compensates the members up to the sum insured limit mentioned under the policy in case of hospitalization due to an accident, illness, or disease. A group health insurance policy is usually taken out by the employer for his or her employees to provide health insurance coverage in case of hospitalization.

The group health insurance premium is paid by the employer, and the coverage is availed by the employees.

The group health insurance policy is valid for a period of one year, after which the policy can be renewed. But there might be instances when the customer is not satisfied with the group health insurance policy and would like to avail of a refund.

The Health insurance policy refund can be availed in two cases:-

In case of policy cancellation or in case of deletion of members in the policy.

  1. Policy Cancellation:- Policy cancellation and group health insurance refund is possible subject to the terms and conditions of the insurance company. Policy cancellation leads to the refund of premium, but the refund of premium would be on a certain percentage of the annual premium depending on the number of days left till the expiry period. Policy cancellation can be due to various reasons. Group health insurance refund would be processed once the policy is canceled.

    The refund amount would depend on the time of cancellation and the time left till the expiry of the policy. The table of cancellation of group health insurance policy and the group health insurance refund is mentioned below:-
Policy PeriodPremium refund
Within 25% of the policy period60%
Within 25%-50% of the policy period40%
Within 50%-75% of the policy period20%
More than 75% of the policy period0%

The group health insurance refund premium would be decided by the insurance company based on the date of intimation for cancellation and other details. Few companies do not refund the insurance premium if there is a claim history under the group health insurance policy. It is important to check with the insurance company before purchasing the group health insurance policy regarding the cancellation process.

2. Deletions in policy:- A group health insurance premium refund is possible in case of deletion of members in the policy. If there are people leaving the organization, then the organization would no longer provide them the group health insurance cover, which means the group health insurance policy would not cover those employees.

The organization can send the list of employees with their details who left the organization to remove their names from the policy. The insurance company would remove their names and calculate the pro rata premium to be paid to the customer. The pro rata premium would be the group health insurance refund premium.

There can also be cancellations in 2 cases that affect the group health insurance premium refund process, as mentioned below:-

  1. Cancellation before the free look period:- There is a free look period of 15–30 days available under the group health insurance policy. If the customer cancels the policy before the free-look period, the insurance company would refund the entire amount minus stamp duty and any other compulsory charges in effect at that point in time. The free-look period provides an opportunity for the customer to cancel the policy without any penalty.
  2. Cancellation after Free Look period:- The other case is canceling the group health insurance policy after the free look period. In this case, the insurance company would not pay the entire amount to the customer. The amount payable to the customer depends on the time of cancellation and the time left till the policy expiry.

The group health insurance refund grid differs from one insurance company to another. It is extremely important to get the latest grid and other details pertaining to cancellation from the insurance company before taking out the insurance policy itself.

The group health insurance policy can be done either by the customer or by the insurance company.

Let us understand the reasons for health insurance policies cancellation by customers or the insurance companies:-

  1. Cancellation by Customer: The group health insurance policy cancellation can be done from the customer’s end. Customers can cancel the group health insurance policy by giving written notice to the insurance company. The customer is not obliged to mention the reason for cancellation, but in general, there would be a few reasons for cancellation such as:-

    The terms and conditions of the given policy are different from those explained by the insurance intermediary.

    After-sales service is not up to the mark, and the customer is dissatisfied.

    The customer got a better deal elsewhere.

    The claim settlement is not up to the mark.

    The lack of network hospitals as required by the customer forces the customer to go for reimbursement.
  2. Cancellation by Insurance Company:- Group health insurance policy can be canceled by the insurance company also. In case of fraudulent claims raised to the insurance company by the customer, the insurance company can cancel the policy.

    In case of misrepresentation of facts also the insurance company can cancel the group health insurance policy and in certain cases forfeit the premium. There are certain instances where the customer would state that he/she is taking the group health insurance policy for the first time and avail discount of premium from the insurance company, customers usually do this if there is a high claim settlement ratio in the previous year as a result of which this year premium would be high.

    The insurance company may cancel the policy by giving notice to the customer regarding the reason for cancellation. Any act of fraud on the part of the customer leads to policy cancellation by the insurance company and in some cases, the premium paid also would be forfeited.

Checklist:- There are certain requirements that need to provide to the insurance company to facilitate the Group Health Insurance cancellation process which are mentioned below:-

  • Cancellation request intimation: A cancellation request should be sent to the insurance company formally, via mail or in writing. The cancellation request should consist of all the details of the group health insurance policy. Once the cancellation request is raised, the insurance company will check for the claims made during the policy period and determine the amount of refund to be made to the customer.

    The intimation should be made as soon as the customer decides to cancel the group health insurance policy as the group health insurance refund is not on a pro-rata basis. The premium to be refunded depends on the time left until the expiration of the policy.
  • Submission of Canceled cheque leaf: After the intimation is made to the insurance company regarding the cancellation, the customer has to submit certain documents such as the canceled cheque leaf which contains the bank account details of the customer.

    The refund would be processed into this account and the customer should make sure that the account details are correct. Customers can also attach the group health insurance policy copy along with the canceled cheque leaf to process the refund. The refund amount.

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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 mostly 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 Marketing Management.