CA Sakchi Jain Instagram – Get refund on cancellation of policy!
Previously, if policyholders wanted to cancel their health insurance policy, they faced fixed refund percentages and often didn’t get their money back based on how much of the policy they used. For example, they would get back 75% of the premium if canceled within one month, 50% if within three months, and 25% if within six months after the free-look period ended. This often led to financial losses.
Now, the Insurance Regulatory and Development Authority of India (IRDAI) has introduced new rules to make the process fairer:
1. Pro-Rata Refunds: Policyholders can now get a refund based on the unused portion of their premium. If the policy term is up to one year and no claims have been made, the insurer must refund the proportionate premium for the unexpired policy period. For example, if a policyholder paid Rs 10,000 for an annual health insurance policy and cancels it after six months without any claims, they will now get a Rs 5,000 refund. Previously, they would not have received any refund.
2. Refunds After a Year: When policies are canceled after a year, insurers must refund the premium for the unexpired policy period, provided the risk coverage for future policy years has not commenced.
3. Shorter Notice Period: The notice period for policy cancellation has been reduced from 15 days to just seven days, making the process quicker and easier for policyholders.
4. No Additional Fees: The circular does not mention any additional administrative fees or penalties for cancellation, simplifying the process and making it more favorable for policyholders.
5. Reduced Cancellation Charges: Cancellation charges on health insurance policies have been reduced, providing more flexibility and clarity to policyholders.
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