An online survey conducted by ET Wealth revealed that almost half the health insurance buyers (48%) are not satisfied with the features and benefits of their policies. This dissatisfaction is also echoed by plenty of group health insurance buyers.
For any organization looking to buy group health insurance, it is essential to understand what group health insurance entails and the different aspects to consider. However, it is equally important to understand the terms and conditions involved in the termination of the policy.
So, here are three scenarios that lead to the cancellation of Group Health Insurance:
Scenario 1 - Cancellation by the policyholder/insurer/employer
If you’ve bought group health insurance for your employees that you are dissatisfied with or have other reasons and wish to cancel the policy, you’d have to give prior notice to your insurance company. While most companies set the notice period at 30 days, some may have a shorter or longer duration. You must check the notice period at the time of purchase.
An important thing to remember here is that your employees will lose the ability to make claims during the notice period. So a good thing to consider would be having a replacement ready for them, instead of the present insurance.
Once you’ve given your notice, your insurer will cancel the policy for the remaining policy coverage period and refund the unutilized premium (excluding service tax). But please note that you will get the refund only if there have been no claims under the policy by any of your employees.
The refund also depends on the time since the policy issue. If your policy duration is almost ending, you may not be entitled to any refund. The percentage of refund that you get is based on the following parameters:
Parameters for Refund at the time of cancellation of group health insurance:
Scenario 2 - Automatic cancellation
In the case of the policyholder’s death, the policy coverage is automatically terminated. And the refund is made following the parameters above if there have been no claims made under the policy.
Scenario 3 - Cancellation by the Insurer
Like you, the insurer also has the right to cancel group health insurance. They, too, are required to provide you with a notice of 30 days (or whatever’s mentioned in the agreement), and they are liable to refund the amount of the premium. However, the conditions and parameters of the refund stay the same. You’d be given a refund only if there’s been no claim and based on the duration of the term that has already passed (as discussed in the table above).
This refund policy, however, does not apply if any of the two scenarios below are true:
- Insured or any person acting on behalf of the insurer has acted in a dishonest manner.
- The insured has not disclosed the material facts or misrepresented facts.
Few things to keep in mind
Apart from the three scenarios, there are two other aspects that you must know while cancelling group health insurance:
- First, the insurer is liable to pay any claims made before the cancellation of the policy. This means that even though you are not allowed to make new claims during the notice period. If any claims are already processed before the notice period, the insurer would have to clear those.
- The percentage of the refund amount you get may vary from insurer to insurer. While the table above is a standard, insurers may change the refund amount. Kindly check these carefully while setting up your group health insurance.
Can We Help You? Plum Group Health Insurance.
Are you looking to cancel your existing group health insurance? What are some of the common pain points that led to this decision? How about trying Plum as an alternative?
Plum offers affordable group health insurance plans starting at just ₹999/year for groups as small as seven. If you are looking for a better health insurance option, talk to us and share your needs by signing up at plumhq.com, and we’d get back to you within an hour to understand your requirements.
Q. What are the specific features and benefits that policyholders find lacking in their current group health insurance plans?
A. Policyholders often seek more from their health insurance. They want wider coverage, including mental health and wellness programs. Lower premiums are also a priority. Many desire easier claim processes. Insurers must listen and adapt. This ensures plans meet evolving needs.
Q. How does the cancellation process and refund calculation differ among various insurers, especially regarding the parameters mentioned for refunds?
A. Insurers vary in their cancellation and refund policies. Notice periods can range from a few weeks to a month. Refund amounts depend on policy usage and time left. Some insurers offer full refunds if no claims are made. Others calculate based on the remaining term. Companies should compare these aspects before choosing. This helps in making informed decisions.
Q. What are the legal implications and responsibilities for employers when changing or cancelling group health insurance?
A. Employers face legal duties when altering health plans. They must ensure continuous coverage. This avoids gaps that can affect employees' well-being. Informing employees in advance is crucial. It allows them to prepare or choose alternatives. Employers should also consider the impact on employee satisfaction. Careful planning and communication are key. This approach respects employees' needs and maintains trust.