How to Cancel Group Health Insurance Policy?

Group health insurance is a valuable benefit provided by many employers. However, there may come a time when you need to cancel your group health insurance policy. Whether you're changing jobs, retiring or simply seeking a different coverage option, knowing how to cancel your group health insurance is essential.

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Key Takeaways

  • Group Health Insurance policies can be cancelled.
  • The employer as well as insurer both have the right to cancel the policy.
  • The refund is also provided by the insurer. However, it is also subject to specified terms and conditions in the policy copy.

What to Do Before Cancelling Your Group Mediclaim Policy?

Group health insurance is also known as employer employee insurance. The policy was made mandatory by the regulatory body of insurance in India, IRDAI. Hence, it is suggested to keep a group health insurance policy in line before cancelling your current policy so that there is no gap in your coverage. 

However, cancelling group health insurance differs from its initial acquisition. Unlike the steps taken when purchasing this coverage, cancellation involves distinct considerations. It is crucial to grasp the various methods of cancelling a group health insurance plan and their potential consequences. This understanding empowers you to make a well-informed and deliberate choice.

Termination by the Policyholder

Should you find yourself dissatisfied with the employer employee insurance policy you've provided for your employees, and wish to terminate it, a specific process must be followed. You are required to notify the insurer in advance of your intent to cancel the policy. Generally, this notice period spans 30 days, although the duration can vary between insurers.

Upon receipt of your notice, the insurer will cancel the policy for the remaining period and offer a refund for the premium that has not been used, with service tax excluded.

The refund amount is contingent on a few factors, including any prior claims made by the policyholder or covered individuals and the length of time since the policy's inception. The refund may be minimal or non-existent if the policy is nearing its expiration date.

It's important to note that the insurer will not accept any new claims during the notice period. Consequently, your employees cannot file any claims during this period. Therefore, as previously mentioned, it is advisable to have an alternative employer employee insurance plan to ensure that your employees continue to have the coverage they need.

Cancellation by Insurer

Much like the policyholder's ability to cancel the policy, the insurer also holds the right to do so. However, the insurer is obligated to provide the policyholder with an advance notice, which is typically determined by the terms outlined in the policy.

It is crucial to understand that the insurer will not issue a refund in specific circumstances. These circumstances include:

  • Misrepresentation or Concealment: If the insured party has misrepresented facts or concealed material information when obtaining the policy.
  • Dishonest Actions: When the policyholder or someone acting on their behalf engages in dishonest or fraudulent activities related to the policy.

Case Scenario

Consider the case of SunWave Electronics, an established electronics manufacturer, and Stellar InsureCorp, an insurance provider. SunWave Electronics had a history of procuring insurance plans for their employees, mostly individual policies. However, on this occasion, they opted for group health insurance for the first time.

After initial negotiations, a representative from Stellar InsureCorp scheduled a meeting with SunWave Electronics' HR department to discuss the group health insurance plan. During the meeting, the HR representative shared extensive information about the 300 employees, encompassing their health profiles and past insurance history. However, they did not specify details about the rising number of cardiac arrest cases among employees over 50.

Several months into the policy, Stellar InsureCorp began receiving an influx of claims related to cardiac arrest incidents, primarily from employees aged 50 and above. These claims posed a significant financial burden on the insurer. Upon uncovering the concealed information regarding the cardiac arrest cases, Stellar InsureCorp considered cancelling the policy due to the omission of crucial information that directly affected the policy's risk assessment.

What about Refund after Cancellation?

The refund of the cancelled policy depends on the time since the policy was issued. If the policy duration is almost completed, the insurer may not refund. However, the amount of refund varies from one insurer to another; hence, it is advised to discuss it while purchasing the policy.

*The refund after policy cancellation is subject to the terms and conditions specified in the policy copy.


Cancelling a group health insurance policy is a significant decision that requires careful consideration. It's crucial to be aware of the specific steps involved, whether initiated by the policyholder or the insurer and understand the potential consequences, including refunds and limitations on new claims. To maintain continuous coverage, it's advisable to have an alternative insurance plan in place. Always ensure transparent communication with your insurer to make an informed choice.


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