In the age of technology and competition, a human life is exposed to various inherent risks. Hence, investing in a good life insurance policy is not a luxury but a necessity to secure the ones we love. While buying a new life insurance policy it often happens that after receiving the policy document people find the terms and conditions not suiting to their preferences. For such situations IRDA has built into its regulations a consumer-friendly provision that takes care of this problem. If someone has bought a policy and realizes he/she doesn’t want it, then he/she can return it and get a refund within the free-look period.

What is the free-look period?

This customer-friendly feature provides the policyholder a 15-day period from the receipt of the policy to decide whether to accept the policy or cancel it. If the policy is cancelled during this period, the buyer stands to receive a refund of the initial premium on returning the policy to the insurer. The free-look period applies to all life insurance policies and to health insurance policies with a minimum term of 3 years.

A free-look period protects a customer if he/she feels that the policy document is not what he signed up for. It also protects a customer from dangers of mis-selling. The free-look facility gives a customer an easy exit route out of an unsuitable policy.

Reading the policy document during the free-look period

Most customers have limited insurance knowledge. So it is difficult for them to decide on utility of a given policy. By doing the following they can resolve this problem:

• Check that the names and contact details of all persons mentioned in the policy (policyholders, nominees, guardians, etc.) are correct.
• Check that there are no discrepancies in the policy terms, premium amounts, sum assured, etc.
• Examine the inclusions and exclusions of the policy.
• Gain clarity about the claim settlement procedure and ensure that it works for you and your nominees.

Procedure to Exercise Free-look Period Option

IRDAI (Insurance Regulatory and Development Authority of India) guidelines to use the free-look are:

• You can exercise this option within 15 days of receiving the policy document.
• You have to communicate to the company in writing – The following documents must be enclosed with the free look request form. Original policy document including first premium payment receipt. Identity proof of the policyholder. The cancelled cheque that displays name of the policyholder and his account number.
• Once the insurance company receives the physical application, within 15 days it will validate the claim and initiate cancellation of the policy and refund process. No charges other than mortality charge for the 15 days, medical charges and stamp duty charges are deducted and remaining premium amount is duly refunded. In the case of a ULIP, any NAV fluctuation as a result of the free look refund will be passed on to the policyholder.