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The free look period in Term Insurance is a specific timeframe, usually 15-30 days from the date of receiving the policy documents, during which a policyholder can review their life insurance policy and cancel it if they're not satisfied, without facing any penalties or charges.
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For example, if Ramesh buys a life insurance policy and receives the documents on September 1st, he has until September 16th to thoroughly review the policy terms. If he finds anything he doesn’t agree with or feels the policy doesn't meet his needs, he can return it for a full refund of his premium, minus any medical or administrative fees.
A free look period is a time frame during which customers are allowed to cancel their term insurance policy without paying any surrender charges. The insurer refunds your first premium amount if you return the term policy within this period. The free look cancellation time is generally up to 30 days for online policies, whereas 15 days for offline policies, from the date of receipt of the policy documents.
In simple words, a free look period is usually given to the customer to assess and review the policy documents. During this period, the customer can terminate the policy if they are not happy with the terms they were told about when they bought it. This term insurance benefit allows canceling your term insurance plan within a specific time frame by contacting your insurer.
Life insurance is a legal agreement that specifies the rights of the life assured and the insurer. With the increase in the penetration of insurance plans, the IRDAI (The Insurance Regulatory and Development Authority) has made rules for a free look period in the life insurance industry. This option is offered to ensure the protection of customers while buying life insurance plans.
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Let’s understand this with the help of an example:
Mr Raman bought a 1 Crore term insurance policy online. He even paid the first premium. However, when he received all the documents for his term insurance plan, he realized that the policy did not suit his needs and decided to surrender or cancel his policy. He submitted the request to cancel his policy before the end of his 30 day free look period and thus received the premium amount back minus the admin charges and other relevant charges.
The free look period is a policy implemented by India's Insurance Regulatory and Development Authority to ensure customer protection and satisfaction. The free look period serves the following purposes :
A free look period is meant to give the customer enough time to go through all the documents regarding their policy in detail. Before investing in a long-term policy, one can understand all the terms and conditions in the free look period.
During the free-look period, the customer might realize something in their life insurance policy that does not suit their needs. This might change their mind regarding the policy, and they would wish to surrender it.
Although the insurance company may lay down all the terms and conditions clearly, sometimes brokers try to sell the customers a policy that might not align with their interests. The free look period allows the customers to realize this and cancel their policy without any extra charge.
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Here is a list of the key points to keep in mind about the free look period when buying a term insurance policy:
Applicability: There is a free look period for all term life insurance policies,irrespective of the type. You must ask the insurer about the duration of the free look period before purchasing the policy.
Time Limit: The free look period is usually 15 days after you receive your physical documents. One must ensure to go through all the documents within this period and request cancellation if required.
Cancellation Request: One needs to raise a cancellation request within the free look period. One can either call, email or use the website application form to cancel their policy.
Details: For terminating the policy your insurer will ask you for details related to the policy such as reason for termination, canceled cheque, receipt of the first premium, etc.
Refund: The insurance company is bound to refund the customer the premium paid by them. However, sometimes, premiums might be deducted due to stamp charges.
One can still end their policy after the free look period ends through a surrender. Usually, the premium is written off as surrender charges if they cancel the policy in the first year. But, if they prepaid the premiums, the insurer will deduct the premium of coverage duration and refund the remaining amount.
Step 1: Check if you are eligible for the free look period. It is usually for 15-30 days after all policy documents have been received.
Step 2: You can request policy cancellation online or offline with reasons for cancellation.
Step 3: After the cancellation request, submit the documents asked to start the process.
Step 4: After verification of your application, the insurance company will cancel your policy and refund the amount after certain deductions.
The free look period in term insurance serves as a vital safeguard for policyholders in India, allowing them to review their policy terms and conditions thoroughly after purchase. This period, typically 15-30 days depending on the insurer, allows customers like Mr Raman to reconsider their decision without incurring any financial penalties.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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