Free Look Period in ULIP

What is a Free Look Period in ULIP?

The IRDAI (Insurance Regulatory and Development Authority of India) Regulations 2017 provide a 'free look' period of 15 days from the receipt of the policy document or 30 days for electronic policies. During this period, you can review the insurance policy and opt-out if unsatisfied with its terms. This Free Look Period applies to all Life Insurance policies, including Unit Linked Insurance Plans (ULIPs), and Health policies with a term of at least three years. The free look period is applicable at the inception of your investment plan.

• Free Look Period for Offline ULIP Plans: 15 days

• Free Look Period for Electronic-mode Policies: 30 days

How Does the Free Look Period Work?

You can learn the working of a free look period from the steps mentioned below: 

• Free Look Period in ULIP Policy: You get a 15-day free look period (30 days in case of electronic policies) to review your insurance policy and decide if you want to carry on with it.

• Opting Out: If you decide to opt out during this period, you can return the policy and get a refund of the paid premium with some deductions.

• General Refund: If you decide to opt out, the premium you paid will be refunded, but costs like medical exams, proportionate risk cover, and stamp duty will be deducted.

• Unit Linked Policy (During Free Look Period): You will get a refund that includes the non-allocated premium, charges from unit cancellation, and the fund value on the cancellation date.

• Refund Conditions:

  • If you haven't made a claim during the free look period: You will get a refund minus the costs of medical exams and stamp duty.

  • If the risk period has started: The refund will be adjusted for the proportionate risk premium.

  • If only part of the coverage has started: The refund will be adjusted for the proportionate premium for that period.

  • Extra Deductions for unit linked policies: The insurer will also buy back the units at their price on the policy return date.

Benefits of Free Look Period in ULIP

The free look period in a ULIP offers several advantages, some of which are as follows:

• You get a chance to evaluate the policy without any financial commitment, ensuring it suits your needs.

• If you decide to cancel within this period, you get a full refund with only minimal charges deducted.

• This period gives you enough time to thoroughly understand the policy and make sure it aligns with your financial goals.

• It provides peace of mind, knowing you have a safety net in case you change your mind.

• Plus, it gives you the flexibility to reconsider and choose a better plan if necessary.

How to Make the Best Use of a Free Look Period in ULIP?

To take benefit of the free look period in a ULIP Plan, you must keep the following points in mind:

• Learn How Refunds Work: ULIPs provide you with a mix of insurance with investment, so their refund rules are different from regular insurance policies. During the free look period, if your investment earns some market returns, you might get higher value during the free look period. You must check the details to see what you will actually get.

• Check Your Contact Info: Make sure your contact details on the application are correct. Wrong information can slow down your refund process. Do not use someone else’s number to avoid missed calls or messages.

• Note the Delivery Date: The free look period lasts 15 days (or 30 days for some online insurers) from when you get your policy documents. You should keep the delivery envelope to remember the date and avoid signing any back-dated receipts, as it could reduce your cancellation time.

• Expect Some Deductions: You will not get all your premiums back if you return your policy during the free look period. Costs like stamp duty, medical charges, and taxes will be deducted. Your refund will depend on the current value of your investment so that you know how much you will get as a refund.

Using the free look period in ULIP wisely helps you decide if this investment option is right for you. For a smooth process, you can buy from Policybazaar to avoid any hassle.

In Conclusion

The Free Look period in a ULIP allows you to make the best decision for your policy to see if it fits your needs. If you are not happy, you can cancel it during this time and get most of your money back, with just a few small charges deducted. It is a safe way to double-check that you have made the right decision.