How to cancel health insurance

First of all, we must establish that, if possible, you should not cancel your policy since you have obviously taken it to protect yourself in bad times. Instead of cancelling, you may want to consider porting your policy to another company. If you have made up your mind to cancel the health insurance policy, then you can get your policy cancelled by calling the company's toll-free number, through email or by contacting the nearest branch of the company. Additionally, your policy will be eventually cancelled if you do not pay the premium to renew the policy.

(Read more: Portability in health insurance)

Your health insurance company can also cancel your policy; this is called automatic cancellation. Your policy may be cancelled if the company believes that you have concealed any details related to your health or committed major fraud at the time of taking the policy. Apart from this, there are some circumstances under which the company may refuse to renew your policy, in which case your health insurance policy will also get cancelled.

(Read more: Waiting period in health insurance)

Almost every health insurance company provides a free-look period with their health policy. Usually, the free-look period is between 15 to 30 days, depending on the company, type of policy and mode of purchase (online and offline). The free-look period is the time period during which you can return the policy to the company if you do not like something about it, like the terms and conditions, and the company will refund your full premium paid. However, during this period, some companies will refund your premium after deducting the premium for that number of days and the policy will be cancelled. Apart from this, along with deducting administrative charges, if the company has got a health checkup done before giving you the policy, then it can also charge you for that health checkup. The stamp duty paid for your insurance policy can also be deducted from your premium. You should understand the terms and conditions of the company before paying the premium while buying the insurance.

(Read more: OPD cover in health insurance)

Once you have decided to cancel your health insurance policy, you must contact the insurance company. You can do this either online or offline. Some companies provide standard health insurance cancellation forms, which you have to fill out completely during the free-look period. In this form, you will have to fill in many details regarding the cancellation of the policy, such as the reason for cancelling, complete details of the policy, the date of receipt of the policy document, etc.

After receiving your request for the cancellation of the policy, the insurance company will get in touch with you. Along with inquiring about the reason for the cancellation of the policy, a possible solution or other options may be suggested to you. If you agree to the company's resolution, that option is given to you by cancelling your request. If you do not agree, the company will further process your request and initiate your refund. The insurance company will send you an official mail containing information about your policy cancellation.

(Read more: Role of TPA in Health Insurance)

If you cancel the policy during the free-look period, you can get your full premium back. What happens if you want to cancel the policy after the end of the free-look period? For this, insurance companies work under certain terms and conditions:

• If you choose to cancel your policy within one month of the end of the free-look period, you can get up to 75% of your premium paid as a refund.
• If you cancel the policy within three months of the end of the free-look period, you can get back up to 50% of the premium paid.
• If you decide to cancel the policy within 6 months of the end of the free-look period, you can get a refund of up to 25% of the premium paid.
• If you do not wish to continue the policy after 6 months after the end of the free-look period, you will not get any refund on cancellation. In such a situation, it’s best not to cancel the policy and let it run until the next premium needs to be paid.

The refund rules mentioned above are applicable if you have not filed any claims. If you have already taken the claim then the insurance company can also refuse to give you the refund.

(Read more: Cashless health insurance)

While in both cases your health cover lapses, there is a big difference between cancelling the policy and not renewing it. When the insurance company or the insured does not want to continue the policy for any reason, then they have to cancel the policy. Whereas, if at the end of the policy year, the policy does not get renewed due to non-payment of the next premium, it lapses.

(Read more: What is not covered in health insurance)

As an insured, you can cancel your health insurance policy or decide not to renew it whenever you want. However, the cancellation is subject to the terms and conditions of the health insurance company. Similarly, the insurance company can also cancel your policy for non-receipt of renewal premium or suppression or misrepresentation of facts on the part of the insured. Generally, the insurance company cannot cancel your policy after 60 days of taking the policy. However, this can be done in case of serious fraud or non-receipt of the premium amount.

If you do not pay the premium, the company will cancel your policy. Apart from this, if you make too many claims in a single year, then even in such a situation the insurance company may refuse to renew your policy. However, before doing so, the insurance company will send you a notice explaining the reason for taking such a step. If for some reason, your insurance company does not renew your policy, then you can take a health policy from another company, and not necessarily for a higher premium.

(Read more: Which is the best health insurance?)