If a policyholder doesn't like a policy, the/she needs to inform the company by writing to them, the communication cannot be oral. For policies that are bought online, then the free-look period increases and is for 30 days of receiving the policy document.
Insurance has always been a necessity, but now people are opting for it more due to the pandemic and health crisis. If you are planning to buy an insurance policy, or have bought a new policy recently, it is always advised to understand the policy properly and go through the terms and conditions.
After buying a policy if you find the policy document and its terms and conditions are not according to your liking you can return it and get a refund out of it. If a policyholder doesn’t like their policy after buying it, IRDAI has made a provision wherein the policy can be returned, termed as the ‘Free look period’ in Insurance.
The Insurance regulator’s consumer-friendly provision of the free-look period is only applicable under certain conditions. To start with, know that not all insurance policies come with this free-look period option. Only Life insurance policies and certain categories of health insurance policies offer this free-look period. For instance, in the case of health insurance policies, health plans that come with a term of at least 3 years offer this facility. Other than that, the health insurer does not generally offer the provision of the Free-Look period.
How to avail of the Free-look period?
The regulatory guidelines have prescribed the process to avail the option of a free look period, making it a transparent and standard process. For instance, policyholders can use this facility within 15 days of receiving the policy document, if the policy is bought offline. For policies that are bought online, then the free-look period increases and is for 30 days of receiving the policy document.
If a policyholder doesn’t like a policy, the/she needs to inform the company by writing to them, the communication cannot be oral. Experts say at times just informing the insurance intermediary also might not be enough and the free-look window could close by the time the company gets to know. Hence, it is better to communicate with the company in writing.
To get your refund from the insurance company, firstly see if your policy falls under the applicable category. Then after letting your insurance company know your intent to use the provision of a free-look period in the prescribed process, you will be eligible to get the refund of premium paid by you.
Note that all the premium paid might not be refundable. The premium refund is usually adjusted for proportionate risk premium for the period on cover, as per the regulatory guidelines. For instance, in the case of ULIP’s the refund is usually based on the NAV. Additionally, insurance companies could also deduct the expenses incurred, if any on medical examination, along with stamp duty charges.
Hence, experts suggest proper due diligence of a policy and its features should be done before buying a policy.