Before purchasing a life insurance policy, policy buyers are advised to read through the terms and conditions of the policy in order to make sure that the policy coverage is suitable for them. However, in case you have already purchased a life insurance policy for yourself, and then find the terms and conditions of the policy to be dissatisfactory, you can return the policy to the insurance provider during the free-look period.
What is the free-look period?
The free-look period is a certain number of days that is provided to policy buyers to review the terms and conditions of the policy that was purchased by them. If the policy is returned during the free-look period, the insurance provider will return the premium paid to the policy buyer after deducting a nominal charge. No other penalties or charges will be levied if the policy buyer cancels the policy during this period. The terms and conditions that govern the free-look clause in life insurance policies are listed below:
- The free-look period is provided for all life insurance policies, as mandated by the Insurance Regulatory and Development Authority of India (IRDAI).
- If a policy buyer wishes to cancel a life insurance policy during the free-look period, the concerned individual will need to exercise this option within the free-look period that is specified by the insurance provider. The free-look period for life insurance plans is usually 15 days, unless it has been sourced through distance marketing. The free-look period for policies sourced through distance marketing is usually 30 days.
- The free-look period, in most cases, begins from the day that you receive your policy document.
- If you wish to return your life insurance policy during the free-look period, you will need to communicate this to your insurance provider in writing.
- In many cases, insurance providers will require you to submit a free-look form, which can be downloaded from the insurance provider’s official website, if you want to cancel your policy.
- In order to cancel your insurance policy, you will need to provide certain details to the insurance provider such as the date of receipt of the policy document, the reason for cancelling the policy, and the name and contact details of the agent that you purchased the policy from, if applicable.
- When cancelling your life insurance policy, many insurers will also require you to provide the original policy document (or an indemnity bond if the policy document is not available) and a receipt of the first premium paid.
- The premium that you paid will be refunded to you after adjusting the amount for the following charges:
- Stamp duty charges
- Proportionate risk premium for the period of time that you were covered by the insurance policy
- Expenses incurred by the insurance company for the cost of the medical examination, if any
- If you are returning a unit-linked insurance plan, the premium refund that you will be eligible to receive will be subject to fluctuations of the net asset value (NAV).
- In most cases, insurance providers will return the premium to policy buyers within a period of 2 weeks.
Purchasing a life insurance policy is a significant financial decision. Thus, you should only continue with your policy if you are sure that it meets your coverage needs. In case you are not fully satisfied with your policy, you can always return it during the free-look period and purchase another life insurance policy that is better suited to your requirements and the needs of your dependents.