A policyholder is provided a free look period during which he or she can analyze and review the policy document. If you are not pleased with the policy’s inclusion and exclusion provisions as stated at the time of purchase, you can cancel it during the free look period. A free look period, as defined by the Insurance Regulatory and Development Authority of India (IRDAI), is a consumer-friendly clause that allows you to cancel a policy without penalty, such as a surrender charge. The regulator establishes a free-look period. As a result, you will be able to select whether or not to keep the policy in the future. It’s also worth noting that the 30-day free look period applies to both life and health insurance policies. However, the rules for each of these types of insurance coverage are different. As a result, understanding these distinctions is critical before purchasing any insurance coverage.
Let us use an example to better grasp the concept of a free look period:
- Mr. Mehra recently purchased a health insurance policy online and picked up the paperwork in person.
- He discovered that the coverage does not meet his unique demands after reading the policy’s precise terms and conditions.
- He disapproves of the policy, believing it to be inadequate.
- What can he do now that he has already paid the premium?
- Is he obligated to bear it?
- The answer to all such doubts is “No,” as there is a free look period covering such instances.
Why Should You Consider a Free Look Period?
An insurance policy, being a legal contract, gives both policy buyers and insurance firms certain rights and responsibilities. Simply put, after paying the payments on time, you receive the insurance benefits specified in the policy contract. If the insurance’s terms and conditions do not match what you agreed to with the insurer during the free look period, you can choose to cancel the coverage. Furthermore, you should be aware that different insurers use their own set of criteria to determine the amount repaid. The premium is then repaid in the appropriate manner. You may also take advantage of the free look time in insurance to clear up any worries and ask questions of the insurer you’ve chosen. This can be done to better comprehend the policy contract, obviating the need to cancel it. If you’re still unhappy with the policy, you can cancel it. In addition, the free look period for life insurance begins when you receive the physical contract for the policy. You must contact the insurance company or agent from whom you purchased the policy if you intend to cancel it during the free look period.
Essential Details Related to the Free Look Period
According to IRDAI, the following are some important details to be aware of during the free look period:
- Life insurance policies, regardless of their type, have a 30-day free look period.
- Within the first 15 days of receiving the insurance policy, you have the opportunity to evaluate it in detail as the policyholder.
- During the free look period, as a policyholder, you must submit a written request to cancel or terminate the insurance policy.
- You can obtain a cancellation request form from your insurer’s website or inquire about the process in person.
- You will be asked to supply specific papers when submitting a policy termination request, including the insurance contract, premium receipt, and a cancelled check.
- Make sure to inquire about the documentation requirements during the free look period with your chosen insurer.
If you do not request a refund with policy cancellation during the free look period, the following may occur:
- You will receive your premium return less any costs incurred by your insurance for medical tests, stamp duty, and other comparable costs.
- You will be charged a proportionate premium for the coverage you chose during the free look period if you choose to return the policy after the free look period.
- This deduction will be made from your refund before you receive it.
- If you purchased a unit-linked insurance plan, the refund calculation is different (ULIP).
- After the free look time, the insurance company has the right to repurchase the units at the specified rate on the policy date.
- This will be in addition to the previously mentioned deductions.