Bought a wrong insurance policy? Here’s what you need to do

By: | Updated: April 2, 2017 6:46 AM

It sometimes happens that after buying an insurance policy one realises that the terms and conditions of the policy are not suitable for one or the policy is simply not meeting one's requirement. In such a case what should you do? Should you keep the policy and silently pay the premium throughout the whole policy term?

The 15 day free-look period is a feature provided by insurers as per the guidelines of IRDA.

It sometimes happens that after buying an insurance policy one realises that the terms and conditions of the policy are not suitable for one or the policy is simply not meeting one’s requirement. In such a case what should you do? Should you keep the policy and silently pay the premium throughout the whole policy term?

The answer is ‘No’. You need not suffer for buying an insurance policy which you have actually not desired for. Instead, you can easily get it changed within the time-frame of 15 days from the date of the policy being purchased.

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Here are a few things you should do in such a case:

What is a free look-up period?

The 15 day free-look period is a feature provided by insurers as per the guidelines of IRDA. Once a policyholder has purchased a policy either online or offline, policy documents are mailed to his address. Upon receiving the policy document, the 15-day free look period begins.

“This window is given to read the policy documents and understand the inclusions and exclusions or the risk factors, which helps the policyholder to spot any miss-selling by the agent or if he has purchased a wrong product. If everything is good, the policy continues but if you are unsure of anything, you have the right to terminate you policy during this period. Your insurer will return the premiums paid after deducting the mortality charges, health check-up charges, and stamp duty. However, the process of refund in case of ULIPs is different”, says Santosh Agarwal- Head of Life Insurance, Policybazaar.com.

How can you get a refund after canceling the policy?

The free look period works for all life insurance policies. For instance, you bought an ULIP policy for yourself which does not match your requirement, then here’s how you will get the refund. “Suppose you paid a premium of Rs 100. Your insurer deducted Rs.20 as mortality charges and invested the rest of Rs.80 in a fund option. The unit will be bought back by your insurer at Net Asset Value (NAV) on the day your policy is cancelled. Assuming that NAV of that unit has grown to Rs 85 during this period, the insurer will refund Rs.85 plus Rs. 20 after deducting the mortality charges for the period from Rs.105. Hence in simple words, you can undo your mistakes during this period,” says Agarwal.

However, after receiving the original insurance policy document, the company makes a refund of the premium after deducting proportionate risk cover charges, medical expenses (if applied) and the stamp duty cost.

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Is it applicable for the health insurance policy?

Mainly, the free look period is applicable for life insurance policies. However, in case of health insurance, if you purchased a health insurance policy from any general insurance company, which has a term of 3 years or more, then you can avail such benefit. However, it not applicable for one or two-year term health policies.

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