Do carriers refund premium upon cancelation?

Aug 22, 2008

  1. Franz Kafka
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    Franz Kafka Guru

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    A newby question: Do carriers refund pro-rated premium upon cancelation of group and individual health policies? E.g. if I just made the 2 months premium and want to cancel the policy a week later, will they refund the pro-rated premium or will I have to wait till the 2 months is complete? Thank you.
     
  2. somarco
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    somarco That Medicare Expert Guy

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    Very few pro-rate partial months. GR comes to mind, but only on STM plans. No prorata refunds on traditional major med or group.
     
    somarco, Aug 22, 2008
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  3. patch36
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    They do if you are paid ahead, but as somarco says, not for partial months. They traditionally pay back overpayments much slower than you paid your monthly payment ;)
     
    patch36, Aug 22, 2008
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  4. The Rabbi
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    My understanding of insurance in general is it is all pro-rated. When coverage is cancelled, unearned premiums are returned. It would be a scam not to.
     
  5. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    Auto insurance carriers in Florida are allowed to "short-rate" you in you cancel in the middle of a policy term.
     
  6. patch36
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    patch36 Guru

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    In my experiences, Medicare policies always start the first of the month. If you cancel or enroll it is effective the first of the next month. I think other health insurances work the same way. P&C coverages are different and tend to start and stop on any specific day you choose, so they are prorated; but of course the original question was about health insurances.
     
    patch36, Aug 22, 2008
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  7. Franz Kafka
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    Thanks guys. So based on above example I gave I should tell the prospect (individual or group health) that "We will apply for the new plan with a new carrier that starts at the end of two month" (?)

    How about canceling the group health plan before the renewal? Do health carriers allow it without any penalty? I know some P&C policies (e.g. workers comp) will make u pay until the end of renewal term?
     
  8. JMO Fan
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    Except life insurance. Cancelled life coverage only returns cash surrender values. No CSV, no refund (except for the initial 10-30 day free look period).
     
    JMO Fan, Aug 22, 2008
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  9. patch36
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    patch36 Guru

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    Not necessarily. You can start the first of the coming month, but the client will have to cancel the old policy and request a refund for the advance premium he has paid. It might be easier, in view of underwriting, ect that you do it the way you suggest, but not necessary.
     
    patch36, Aug 22, 2008
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  10. The Rabbi
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    What happens in Florida is different. People buy ins so they can get registration and then don't make payments. The companys deserve to keep some for wasting their time.
     
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