Many people associate the free look period with just long-term life insurance plans. In health insurance plans, the Insurance Regulatory and Development Authority (IRDA) of India has added a free look period. It is a user provision that is currently only accessible for these two industries. The requirement for insurance has always existed. Life and health insurance plans have become increasingly necessary as the epidemic has increased health-related difficulties.
Check out this guide to know everything you need to know about the free look period for life insurance policies.
What is the Free Look Period?
The free look period in life insurance allows a policyholder to analyse and review the policy document. You may cancel or terminate the life insurance plans in India during the free look period if you are dissatisfied with the inclusion and exclusion terms disclosed at the time of purchase.
You should also be aware that the free look period is applicable to both life and health insurance policies. However, the rules governing each of these types of insurance coverage vary.
How to Ensure That You Use the Free Look Period Efficiently?
There are several factors with which you can ensure to utilise the free look period in life insurance plans:
- Keep the delivery date in mind
In life insurance in India, once you buy the policy, the 15 days free-look immediately commences from that day. Make a note of the delivery date on the envelope holding the policy documents. You should not mark your signatures on the back-dated receipt since this will impact the trial term of 15 days, and the deadline to cancel it will be missed.
- Cancel policy through the insurer
Do not inform the agent verbally if you are planning to cancel or terminate your life insurance policy. The agent could try to stop the procedure. There have been occasions where agents suppressed documents until the free-look time expired.
Call the insurer’s customer service line to inform them of your choice to cancel the insurance. To cancel your coverage, you must go to the insurer’s office. Make sure that you do not miss collecting a receipt time-stamped on it. This will acknowledge the application.
- Recognise the refund procedure for ULIPs
In the case of unit-linked insurance contracts, the insurer will repurchase the units assigned at the net asset value on the day your policy is cancelled.
Can One Cancel the Life Insurance Policy After the Free Look Period?
After the free-look period, the policy can be cancelled through surrender. If you terminate the life insurance plan in India within the first year, the premium is usually applied to surrender charges. The exact charges based on the number of years of paid-up premium should be found in the policy schedule.
What Happens When a Policyholder Exercises the Free Look?
If the policyholder sends the physical application within a time frame of 15 days and it gets received by the insurance provider within this period, then the claim will be accepted. Plus, the cancellation process for the policy, as well as the reimbursement process, will get initiated. No charges will be applied other than the mortality charge for 15 days. Charges with respect to stamp duty and medical charges will be deducted. The remaining amount of the premium will be repaid.
All policyholders are ensured that they can use the free look period with all the required help. Do check the free-look period clause before buying it.