Med supp premium refunds

[Winter_123]

What is the rule/policy in general regarding refund of premiums where the client may have paid up for a year but decides to switch to a more competitive carrier?

So, say the client pays up for the year in January and decides in April that they want to switch. Client can simply cancel the paid up policy and expect a pro-rated refund or they are stuck for the year or? Does this vary by carrier or more or less industry or insurance commission controlled?

With life insurance polices they are pretty much stuck but that is another arena.

Thanks.

Winter

 

[Russ]

What is the rule/policy in general regarding refund of premiums where the client may have paid up for a year but decides to switch to a more competitive carrier?

So, say the client pays up for the year in January and decides in April that they want to switch. Client can simply cancel the paid up policy and expect a pro-rated refund or they are stuck for the year or? Does this vary by carrier or more or less industry or insurance commission controlled?

With life insurance polices they are pretty much stuck but that is another arena.

Thanks.

Winter

They get the unused premium back. I've done that a few times for folks(switched them to a better plan or a smaller premium on the same plan..with a company I represent) and they always got the unused premium back(on med-supps).

 

[retread]

They get the unused premium back. I've done that a few times for folks(switched them to a better plan or a smaller premium on the same plan..with a company I represent) and they always got the unused premium back(on med-supps).

This just came up today for me... I told them to expect the carrier to recalculate the annual premium without the annual discount, then prorate the policy. Since I haven't done this before, I thought this would be the rule. Anyone have a comment?

 

[Russ]

This just came up today for me... I told them to expect the carrier to recalculate the annual premium without the annual discount, then prorate the policy. Since I haven't done this before, I thought this would be the rule. Anyone have a comment?

If you've switched them to one of your companies, I would wait until your policy is issued before sending a signed letter by the insured requesting cancellation to the company they are dropping. At least that's how I did it...wrote a letter to the company their canceling(kept the signed letter), and as soon as I found out the policy I wrote was issued, I would mail the letter in to the company they were dropping.

 

[jdeasy]

What is the rule/policy in general regarding refund of premiums where the client may have paid up for a year but decides to switch to a more competitive carrier?

So, say the client pays up for the year in January and decides in April that they want to switch. Client can simply cancel the paid up policy and expect a pro-rated refund or they are stuck for the year or? Does this vary by carrier or more or less industry or insurance commission controlled?

With life insurance polices they are pretty much stuck but that is another arena.

Thanks.

Winter

They will get a pro rated refund minus the annual discount if there is one. Same goes for life insurance policies.

 

[The Rabbi]

In my life I've always known that insurance is pro-rated. To do otherwise would be stealing since there is no longer a service to charge for.

 

[Joe Moore]

What is the rule/policy in general regarding refund of premiums where the client may have paid up for a year but decides to switch to a more competitive carrier?

So, say the client pays up for the year in January and decides in April that they want to switch. Client can simply cancel the paid up policy and expect a pro-rated refund or they are stuck for the year or? Does this vary by carrier or more or less industry or insurance commission controlled?

With life insurance polices they are pretty much stuck but that is another arena.

Thanks.

Winter

I think this probably has to do with the laws in the state. In TN we have had companies refuse to refund unearned premiums because state laws in TN says they do not have to, just because the client wanted to cancel the policy. I cannot remember a company refusing to refund unearned premiums in case of death of the insured.

You may check with your state insurance commission, but don't expect to find someone that really knows without research.

 

[Crabcake Johnny]

Joe - it must be great to have your sons working with you.

 

[retread]

They will get a pro rated refund minus the annual discount if there is one. Same goes for life insurance policies.

You sure about this jd? It doesn't seem appropriate to prorate the premium refund and then apply the discount. One would expect that a more equitable calculation would be to remove the discount first, and then prorate the balance since the customer will not be paying the full annual premium which the discount was predicated upon.

 

[jdeasy]

You sure about this jd? It doesn't seem appropriate to prorate the premium refund and then apply the discount. One would expect that a more equitable calculation would be to remove the discount first, and then prorate the balance since the customer will not be paying the full annual premium which the discount was predicated upon.

That's what I meant. Sorry I worded it wrong. You don't get a refund and a discount.