A life insurance policy is typically a long term financial commitment towards buying risk protection. Given the long term nature of the product where you are required to pay premiums for say between 10-30 years, it is extremely essential to be sure of what you are buying. Needless to say, the decision to choose a product should be taken after careful comparisons of available products in the market to ensure we get the right product for our specific needs. Even so, every once in a while, one may end up realising that the product bought by him or sold to him is not the right one. It is for scenarios such as these that the insurance regulatory framework in India provides customers with a Free-Look period during which one can return the policy to the insurer and get a refund of the premium paid.
What is free-look period?
Guidelines issued by the Insurance Regulatory and Development Authority (IRDA) allow customers an option to review their decision to purchase a particular life insurance policy and return the policy to the insurer if you so desire and get a refund of your premium. The duration of this period during which you could return the policy is 15 days from the date of receipt of policy.
Why is there a free-look period?
These guidelines allows customer to review the policy in greater detail after having received it and to go through the policy wordings, terms and conditions so as to satisfy themselves about having made the right purchase. This gives you an opportunity to cross check your understanding of the product and what you thought if offers basis your interaction with any sales personnel or intermediaries with the actual document(s) which detail the product features, benefits and costs. In case you reach the conclusion that the product is not what you thought it was for any reasons whatsoever, including having been mis-sold the policy, you can return the policy to the insurance company and ask for a refund of your premium.
How do I go about completing a free-look cancellation?
One needs to keep in mind that the free-look period is available for only 15 days from the date of receipt of policy. It is therefore important to review your policy documents at the earliest. Post review, if you take a decision to return the policy under the free-look period then you will need to contact the insurance company to communicate your decision to cancel the policy as a free-look cancellation. You will not be required to give any reasons or explanations for your decision.
Most insurance companies will typically want you to fill up a cancellation form clearly stating that the action being taken by you is under the free-look cancellation feature. You would also be required to return the original policy documents along with the cancellation form. Most companies will have standard cancellation forms available on their websites. Alternately, you could contact their customer services departments/call centres or walk into on their branches/offices to get assistance in completing the process.
Will I get a complete refund of my premium?
You will not get a complete refund of your premium. Certain charges such as stamp duty and / or the medical examination fees, if any, may be deducted from the premium amount and the balance will be refunded to you.