Should You Cancel Your Health Insurance Plan in 2025?
canceling your health insurance plan might make sense if the service is poor or if you’ve found a better policy at a similar price, but how much you get back and whether it’s the right move depends entirely on when and why you cancel. Here’s what a top health insurance advisor at Ditto says:
| “If you cancel within the free-look period, which is usually 30 days from first receiving the policy, you’ll get most of your money back, minus medical test, pro-rated premium, and stamp duty charges. However, if you cancel after that, you may not receive a substantial refund. So check these conditions before purchase itself.” – A Top Health Insurance Advisor at DItto Insurance |
Let’s break this down step by step.
Health insurance plans keep improving, insurers change their terms, and your personal needs may shift, too. So, if you’re stuck with a policy that no longer serves you, it’s natural to consider canceling it. But before you make that move, it’s important to understand what cancelation actually involves and whether it’s the right call.
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Overview
Can You Cancel a Health Insurance Policy Online?
Yes, many insurers now allow you to initiate cancelation through their online customer support channels, which makes the process more convenient. The options generally include:
- Sending an email to the insurer’s official support address
- Logging in to the insurer’s online portal or app
- Using their chatbot or WhatsApp support feature, if enabled
However, even if you start the process online, you may still be required to submit physical copies of your documents, especially if the insurer needs signed forms or original policy papers for legal reasons.
So, while the first step can be digital, be prepared to follow up with a hard copy submission if requested. Apart from this, the insurer may also contact you to understand why you canceled the policy.
Pro tip: If you've purchased your health insurance policy through Ditto, you can always contact us for any post-sales support.
How does the Free-Look Period in Health Insurance affect cancelation?
All health insurance policies come with a free-look period, usually 30 days from the date you receive the policy document. If you cancel the policy during this window, the insurer will refund your entire premium minus any minimal charges such as stamp duty, medical expenses, or administrative fees.
This option applies only to first-time buyers or newly purchased policies, not renewals. The free-look period lets you review the policy terms and cancel without penalty if it doesn’t meet your expectations. Once this window closes, cancelations are subject to refund rules and your claim history.
How to Cancel A Health Insurance Plan After the Free-Look Period Ends?
After the free-look period, you can still cancel your health policy anytime during the year by submitting a written request. Refunds are calculated on a short-rate or pro-rata basis, depending on how long the policy was active. However, if you've made even one claim, you're not eligible for any refund.
Also, note that taxes and administrative fees are deducted from the final payout. While you won’t receive the full amount back, a partial refund is still possible if you cancel within the first few months and haven’t made a claim.
Steps to Cancel a Health Insurance Policy in 2025
If you’ve decided to go ahead with the cancelation, here’s how the process typically works:
- Contact the insurer’s customer support by phone, email, or in person at a branch office.
- Request the policy cancelation form and complete it thoroughly.
- Prepare the required documents: valid ID proof, a signed letter requesting cancelation, and the original policy documents.
- Include your bank account details to receive the refund, if applicable.
- Submit everything to the insurer and wait for acknowledgment and confirmation.
Once your documents are verified and your eligibility is assessed (especially claim history), your insurer will process the refund. The time taken can vary from 7 to 15 business days, depending on the company.
Always keep a copy of the cancelation form and acknowledgment for your records in case of disputes or delays.
Refund Rules and Deductions After canceling Your Health Insurance Policy
Here’s what happens to your refund if you cancel your policy:
How does cancellation affect your refund?
The amount you receive back depends on how long the insurance policy was active and whether any claims were made during that time. Insurers apply a short-period rate chart, which assigns refund percentages based on the number of completed months.
How does the type of policy affect your refund?
Refunds are also affected by the type of policy, such as individual, family floater, or group health insurance, as well as the claim status. If you’ve made a claim during the policy year, you’re not eligible for any refund.
The earlier you cancel (and the cleaner your claim record), the more you’re likely to get back. However, the actual refund amount is always lower than what you initially paid due to GST and administrative charges.
Can You Cancel a Health Insurance Policy After Making a Claim?
Yes, you can still cancel your health insurance policy even if you’ve made an insurance claim. But here’s the important detail: you won’t receive any refund on the premium in such cases.
Since the insurer has already paid out benefits under the policy, there’s no refund value left. The cancelation simply means you won’t be able to raise any more claims for the remainder of the policy year.
This decision is final. So, if you cancel after the claim and face another hospitalization, the expenses won’t be covered, even if they occur just a week later.
For this reason, canceling after a claim should be done only if you’re absolutely sure you no longer need the coverage or are replacing it with a new policy.
Porting or canceling: Which is A Better Alternative in Health Insurance?
If your primary concern is poor service, delays, or claim hassles, but you’re otherwise content with the type of plan, you may want to consider porting your policy instead of canceling.
Porting allows you to switch to a different insurer without losing benefits, such as waiting period credits for pre-existing conditions or specific treatments. You retain your policy continuity, and the new insurer recognizes your past coverage duration. Here’s a table to help you understand better:
| Aspect | Porting Your Policy |
|---|---|
| When to Consider | If you're unhappy with claim service, delays, or poor customer support, but otherwise satisfied with your plan type. |
| Key Benefit | Retains waiting period credits for pre-existing conditions and other continuity benefits. |
| How It Works | You switch to a different insurer, and the new insurer acknowledges your past coverage duration. |
| When to Apply | Only during renewal. Must be initiated at least 45 days prior to the policy's expiration. |
| Evaluation Process | Treated like a new application, subject to fresh medical checks and underwriting. |
| Bottom Line | If you want better service without losing your accumulated benefits, porting is usually smarter than canceling. |
In most cases, if you're dissatisfied with your current insurer but still want protection, porting your policy is a smarter option than canceling and starting from scratch.
What Happens to Your Tax Benefits After Canceling Your Health Insurance Policy?
Mid-year cancelations can impact your Section 80D deductions.
- Section 80D benefit may be reversed: If you cancel your health insurance within the same financial year in which you claimed a tax deduction, you may no longer be eligible for it.
- Update your tax filing accordingly: Not holding the policy for the full year can raise flags during return processing. Ensure your ITR reflects this change.
- Avoid notices by correcting early: For instance, claiming ₹25,000 in April and canceling in August without updating the return could invite scrutiny.
Disclaimer: Always consult your tax advisor or chartered accountant to understand the exact impact on your filing and how to adjust your returns properly.
Why Talk to Ditto for Your Term Insurance in 2025?
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Conclusion: Think Before You Cancel Your Health Insurance Policy
If you're considering canceling your health insurance, here are three key actions to take before making a final decision:
1) Check your timing: Free-look vs. mid-policy.
If you're still within the free-look period of a new policy, cancellation may make sense and could result in a partial refund.
2) Explore porting instead of canceling.
If you’re dissatisfied with your insurer, consider porting the policy. It allows you to switch to a better plan while retaining key benefits, such as waiting period credits and continuity coverage.
3) Don’t cancel for budget reasons without considering alternatives.
If affordability is the issue, you can reduce your sum insured, opt for higher deductibles, or explore cost-effective plans. Dropping coverage altogether can leave you financially vulnerable when you need it most.
Making an informed choice ensures that you don’t end up financially exposed, especially in times when health expenses can be unpredictable and steep.
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