Irda, through an amendment to the Health Insurance Regulations, 2013, has sought to bring more clarity to the concept of free-look period for such policies.
All new individual health insurance policies will now have a 15-day free-look period from the date of receipt. The policyholder can review the terms and conditions of the cover during this period and return the policy if it doesn’t suit his requirements. The free-look period will, however, not be applicable to individual health insurance policies with a tenure of less than a year.
The Insurance Regulatory and Development Authority (Irda) has said that if the insured has not made any claim during the free-look period, he will be entitled to a refund of the premium paid minus the expenses incurred by the insurer on medical examination and stamp duty charges.
If the risk has already commenced and the policyholder wants to return the policy, the insurer will deduct the proportionate risk premium for the period of the cover. Where only a part of the risk has commenced, such proportionate risk premium with the risk cover will be deducted.
For unit-linked health insurance policies, in addition to the three deductions — medical examination expenses, stamp duty charges and risk premium — the insurer will repurchase the unit at the price as on the date of return of the policy.
In May last year, Irda had introduced the concept of free-look in health insurance and the amendments to the guidelines have brought in more clarity on the time period and deductions.
The cost of any pre-insurance medical examination generally forms part of the expenses allowed in arriving at the premium. However,
in case of products with term of one year and less, half of the cost is borne by the insurer once the proposal is accepted, except in travel insurance where these are not reimbursed. Insurers provide a list of hospitals and fees charged for pre-insurance medical examination and the report has to be from those hospitals only.
The regulator has clarified that cumulative bonus may not be allowed on benefit-based policies, except for personal accident cover. Defined benefit-based policies or hospital cash plans pay on the number of days the insured is hospitalised. On the other hand, indemnity-based plans pay the actual expenses on submission of original papers, subject to terms and conditions of the policy.
No-claim bonus, or cumulative bonus, is given by the insurance company to a policyholder in a particular year if there is no claim and is done by increasing the sum insured.
The amendments also mention that insurers will provide coverage to non-allopathic treatments. However, such treatments will have to be undertaken in a government hospital or in any other institute recognised by government or those accredited by Quality Council of India/National Accreditation Board on Health.
In 2002, Irda had come out with the concept of free-look period that allowed a customer buying a new life insurance cover to review the policy within 15 days from receipt of the document. If a customer feels that the new life or health insurance policy does not include all clauses promised at the time of sale, he can return it within two weeks.
The insurer will have to return the premium paid after deducting proportionate risk premium for the period of cover and certain other costs pertaining to stamp duty and medical examination of the proposer.
Experts say once a customer has paid the money for the insurance cover, he should call up the helpline number to find out the date of dispatch of the policy. If he wants to cancel the policy during the free-look period, the policyholder needs to fill out the free-look period cancellation form and send it to the insurance company along with the original policy document. Insurance experts says insurers’ customer care department calls up every customer after a policy is dispatched to ensure that he/she understands the fine print and is fully satisfied with policy details.
New customers of either health or life insurance must ensure that the coverage amount, policy specifications and other riders are clearly mentioned in the document. For a health insurance policy, it is essential to check for exclusions of certain ailments.
Insurance companies only accept written requests for cancelling or making changes to a policy. It’s important to keep documentary proof handy for any dispute in future. Analysts say getting back the premium after some deduction is a better option than carrying on with a policy that does not meet your requirements.
LOOK BEFORE YOU LEAP
* If the insured has not made any claim during the free-look period, he will be entitled to a refund of the premium paid minus the expenses incurred by the insurer on medical examination and stamp duty charges
* If the risk has already commenced and the policyholder wants to return the policy, the insurer will deduct the proportionate risk premium for the period of the cover
* Where only a part of the risk has commenced, such proportionate risk premium with the risk cover will be deducted
* For unit-linked health insurance policies, in addition to the three deductions — medical examination expenses, stamp duty charges and risk premium — the insurer will repurchase the unit at the price as on the date of return of the policy
* Cumulative bonus may not be allowed on benefit-based policies, except for personal accident cover
