Today?s Era is of customer satisfaction, no industry can get on the path of growth without satisfying their customers. Customer wishes to test the product before going for it. This thumb rule also applies to the Insurance Industry. There is a time period of certain days mandated by the Insurance Regulatory and Development Authority (IRDA) wherein customers can review the policy and if dissatisfied can cancel the policy.
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Free-Look Period in Insurance
A customer friendly feature necessitated by IRDA under which a time window of 15 days is given to the policy holder to examine the policy thoroughly and can opt out if does not find it suitable.
The period of 15 days starts from the date of receipt of policy document by the policy holder. You can cancel the policy within free-look period if it does not match up your expectations or you can also get some features changed or switch to another policy if you were given false information about the policy by your agent.
The 15 days free-look period applies to all life insurance policies but the health insurance policy having minimum term of 3 years comes under the ambit of free-look period.
Best utilization of Free-Look Period
1. Save the Envelope
Time period of 15 days begins from the date of receipt of the policy documents but the onus of proving the date of receipt is on the policyholder. So make sure you retain the envelope containing the policy documents as it bears the date of delivery.
One more thing to be cautious about while accepting the policy documents is to check the receipt date, make sure you don?t sign the back-dated receipt.
2. Provide Correct Details
Most of us buy insurance policy from our known agent and get our form filled by them. But what we need to make sure is that all the details in the form are filled are correctly, namely contact details and email address. IRDA has mandated all the insurers to give a welcome call to the policy holder and brief them about the policy. So in case you were given wrong information by your agent you can take action to terminate the policy.
3. Cancel Policy in writing through Insurer
The cancellation process of policy requires a written application from the policy holder before the end of 15 days free-look period, along with the other details such as receipt date of policy documents, reason for cancellation, receipt of first premium and bank details or cancelled cheque for refund. Many insurers have prescribed format of application which can be downloaded from their websites. Here are examples of Free-Look applications of ICICI Pru Life, Biral Sun Life, Max Life Insurance, Kotak Life Insurance.
If you decide to terminate the policy then do not merely rely on the agent. Many a times agent withheld the documents to delayed the process which bars you from cancelling the policy in the free-look period.
4. Termination Charges
Do not expect full refund of your premium even if you cancel the policy in free-look period. The insurer deducts certain expenses incurred on medical test, stamp duty, admin charges etc. If the risk cover has already commenced, the proportionate risk premium for the period will also be adjusted with your refund amount.
5. ULIPs cancellation process
Unit Linked Insurance Policy (ULIPs) cancellation is done, by the insurer repurchasing the units allotted to the policy holder at the NAV on the day of cancellation of the policy. Suppose your premium was Rs.100, you insurer incurred expenses of Rs.20 and invested remaining Rs.80 in the fund option. On the day of cancellation the NAV has soared to Rs.90. Now the insurer will refund Rs.90 after adjusting charges towards stamp duty, medical test etc.
Words of Wisdom
Do not take the time frame of 15 days for granted, do read and understand the terms and conditions of policy with a fine-tooth comb, even which are written in small fonts. Cancellation process is not as easy as it looks, you will need to fill out forms, make few calls to the insurer?s call center, send your original policy documents along with other documents and most importantly follow up regularly. So it’s wise to start as early as possible and not to wait for the last minute.