Explainer: What Is A Free Look Period?

Mis-selling of insurance policies, especially life insurance, is an ongoing problem, either due to misinformation on the part of the agent or the seller or lack of knowledge on the part of the buyer. To protect the interest of buyers, the Insurance Regulatory and Development Authority of India (Irdai) has created a window within which a policy can be returned or cancelled after issuance. This window is known as the free look period.

What Is It Meant For?

• Free look period is a safety net that is meant to give a second chance to the customers who may have bought a policy on an impulse.
• It allows you to review the policy document and check if the coverage, premium, and benefits of the insurance plan meet your needs and expectations.
• For instance, you may have checked the premium and coverage amount but may have overlooked the room rent limit in your health insurance policy that can affect the claim amount.
• Also, it allows you to spot any discrepancy between what the seller told you at the time of buying and the actual terms of the policy.

How Does It Work?

• The insurance regulator has mandated a minimum free look period of 15 days for all life and health insurance policies.
• This 15-day period is valid from the day of the receipt of the policy document.
• If you are dissatisfied with the policy, you need to submit a written cancellation request to the insurance company within this time period.
• You can either visit the nearest branch of the insurance company or send an email to the customer care department. Ensure you take an acknowledgement.
• The insurance company will verify your request and process the cancellation.

Refund Rules

• If you cancel the policy during the free look period, you will receive a refund of the premium amount, minus the expenses incurred.
• These expenses may include the cost of medical examination, stamp duty, and administrative charges.
• You can only get a refund if you don’t make any requests for claim during the free look period.
• The insurer may deduct a portion of the premium paid for the time the policy was active or in proportion to the coverage that is used.
• For unit-linked plans, the insurer can repurchase the units at the current price when the policy is returned, with the deductions mentioned above.