Insurance plans have become an integral part of financial planning. Whether for your health, vehicle, home, or other assets, insurance provides peace of mind by protecting you from the uncertainties that life brings. However, there may be circumstances where you must discontinue your current insurance plans, leading you to consider changing or cancelling your policy.
“You can cancel any retail insurance policy, including life, health, and motor insurance. Cancellation can occur at any time during the policy term, subject to the specific terms and conditions outlined by the insurer,” says Narendra Bharindwal, vice president, the Insurance Brokers Associations of India (IBAI).
Cancelling A Policy After The Look-Up Period
In health insurance, you can cancel your policy during the free look-up period, typically within 30 days from the policy's start date. This typically happens when the customer receives the policy document with Terms and Conditions and is unhappy with part of it. “During this period, if you decide to cancel, you will receive a full refund of the premium paid, minus some charges such as medical check-ups, and insurance risk charges,” says Bhaskar Nerurkar, head-health administration team, Bajaj Allianz General Insurance.
If you choose to cancel the policy after the free look-up period, you can cancel the policy by providing a written notice of seven days. The refund issued will be proportionate to the time you were covered.
“In a policy where the risk has already commenced the premium refund for the unexpired risk period will be on a pro-rata basis, provided no claim has been made during the policy year. In long-term policies where the risk date has not yet started, the premium will be refunded with deduction applicable,” says Nerurkar. Cancelling your insurance policies requires careful consideration of the consequences and potential gaps in coverage.
“Understanding when cancellations are accepted and how refunds are calculated is crucial for making informed decisions and allowing individuals to explore their insurance options confidently and clearly,” says Anuj Parekh, co-founder and CEO at Bharatsure, an insuretech startup.
What To Keep In Mind
When contemplating cancelling your insurance policy, it's important to understand the implications and processes involved. “Cancelling health insurance, in particular, is not advisable without careful consideration. This policy is crucial for your overall well-being and financial protection,” says Nerurkar. Cancelling a health insurance policy without securing alternative coverage can leave you vulnerable to high medical costs and may also lead to loss of continuity benefits.
