Insurance is a legal contract specifying the rights and responsibilities of the insured and the insurance provider. With increased penetration of insurance products, the Insurance Regulatory and Development Authority has laid rules for a free look period in the insurance sector. The facility is offered to ensure consumer protection while buying life and health insurance. Read ahead to know what a free look period is and its purpose in an insurance policy.
What is a Free Look Period for Life Insurance?
A free look period is a window in which you can cancel your insurance policy without paying for the surrender charges. Moreover, the insurance company refunds your first premium if you return the policy within the period. The free look cancellation period is usually up to 30 days of policy issuance.
But the company can extend the free look period up to 30 days as per the rules. The benefit allows cancelling your life insurance policy within a specific window by contacting your insurance provider. Now you know about the free look period meaning, read about its purpose.
What is the Purpose of a Free Look Period in an Insurance Policy?
The free look period is a consumer-friendly initiative that helps you make an informed choice while buying an insurance policy. It serves the following purposes:
- A free look period provides you with sufficient time to go through the life insurance details in the policy documents. During the free look period, you can understand the policy terms and conditions before choosing to invest in the long term.
- It is possible that after reading the documents, you may find some terms or conditions unacceptable. This may change your mind about the insurance policy, and you may want to cancel it.
- Despite insurance companies making you aware of the terms and conditions, sometimes agents try to sell you policies that are unsuitable for you. However, a free look period offers you the chance to return the policy if you don’t like the terms or conditions without extra charges.
- You can also clear your doubts and confusion within the window instead of terminating the policy after investment.
So, to ensure you understand the policy well and make the best choice, the insurance companies provide free look period insurance.
Essential Things to Keep in Mind
The process of terminating a free-look period of life insurance is quite simple. But you must know the following essential points before terminating a policy:
- Asking the insurer about the free look period: Insurance companies do not offer a free look period on all health insurance plans. In some health plans, the benefit of a free look period is provided only when the policy has 3-year tenure. So, ensure you read the policy documents or ask the insurance provider about the same.
- Keeping time limit in mind: The free look period is usually up to 15 days after you receive the physical documents. So, you must remember the date when you received the documents to avail of the benefit.
- Requesting cancellation: To request policy cancellation, you must request in writing to the insurance provider within the free look period. You can also fill up a cancellation form on the insurance company’s website.
- Providing details: After the cancellation request, the insurance company may ask you to furnish details such as when did you receive the policy document, reasons for cancellation, information about the agent, etc.
- Providing the documents: The documents required to complete the cancellation procedure are the policy contract, receipt of the first premium and a cancelled cheque.
What About the Refund?
Upon policy cancellation within the free look period, the insurance company doesn’t refund the entire premium amount. However, it may make the following deductions:
- The charges for the stamp duty.
- In health insurance policies, the insurer bears 50% of the costs of the medical tests, which the company deducts from the premium.
- A proportionate premium for the coverage duration.
A Step-By-Step Guide to Cancelling a Policy Within the Free-Look Period
- Check if you are eligible for a free look period. In the case of some health insurance plans, the benefit is offered if the policy tenure is of 3 years.
- You can request policy cancellation online or offline with reasons for cancellation.
- After the cancellation request, submit the required documents to start the process.
- After verification of your application, the insurance company will cancel your policy and refund the amount after certain deductions.
What Happens if You Cancel Your Policy After the Free Look Period?
You can still end your insurance policy after the free look period ends through a surrender. Usually, the premium is written off as surrender charges if you cancel the policy in the first year. But, if you prepaid the premiums, the insurer will deduct the premium of coverage duration and refund the remaining amount.
Conclusion
You must make the best decision while buying an insurance policy, and a free look period ensures the same. Now that you are familiar with the free look period definition, you need to check for eligibility and make the most of this benefit. If you are not comfortable with some provisions of the policy, you can cancel it at the right time instead of getting locked for the long term. Also, by reviewing the terms and conditions during the free look period, you can avoid inconvenience during the claim settlement process.
With growing uncertainties, life insurance has become a necessity of life. Life insurance gives a protective cover to your loved ones if anything unfortunate happens to you. You can also fulfil several life goals and dreams of your family by investing in the right life insurance plan at the right time.
Tata AIA Life offers the best policy options and advice for life insurance. With tailored Tata AIA life insurance plans, you can choose a policy that is most suitable for your needs. So, buy the right life insurance online today and build a financially secure future for your loved ones.
L&C/Advt/2022/Jul/1662
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