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Free Look Period in Health Insurance

When buying health insurance, it is very important for policyholders to check the suitability of a policy before investing in it. Equally important is the need to understand the terms and conditions as well as the fine print of any policy document before you commit to it. However, if you feel you just bought yourself a policy that is not adequately suitable for you or one that does not cater to your needs the way you hoped it would, do not panic! ...Read More

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Free Look Period in Health Insurance

What's Free Look Period in Health Insurance?

What's Free Look Period in Health Insurance?
September 19, 2024

Table of Content

 

When you buy any kind of insurance, be it health insurance or a life insurance plan, you get a free look period after purchasing the insurance. A health insurance free look period is the time that every new policyholder gets to thoroughly examine the newly purchased plan.

This period allows the policyholder to carefully read the terms and conditions, understand the coverage, and ensure it aligns with their expectations. During this deliberation phase, one may cancel the policy without any penalties and get a refund on the complete premium paid. It is noteworthy, however, that policyholders must provide a valid insurance cancellation reason.

Usually, every health insurance plan, whether it is a defined benefit plan or an indemnity plan, features atleast a 30 days free look period from the policy issuance date. However, policies with a tenure of more than a year get a 30-day free-look period as per the latest Insurance Regulatory Authority Of India (IRDAI) guidelines (March 2024).

How does the Free Look Period work?

To qualify for the health insurance free look period feature, you must first have a health insurance plan with a policy term. Additionally, you need to return the policy within the Free Look Period, typically 30 days. If you cancel after this period, you may not be eligible for a refund.

Here’s an example of how the Free Look Period works:

Ms. Charu opted for an HDFC Life Click 2 Protect Optima Secure2 policy offering a sum insured of 5 lakhs. Due to a busy schedule, she couldn’t thoroughly evaluate her insurance needs at the time of purchase. After consulting with her financial advisor a few days later, she realised that the 5 lakh coverage might be insufficient for her requirements.

Making use of the Free Look Period, she cancelled her 5 lakh policy and received a full refund. She then chose to purchase the HDFC Life Easy Health Plan3, which has comprehensive coverage to meet a wide range of healthcare needs.

Benefits of the Free Look Period

The health insurance free look period offers insurance holders a valuable opportunity to examine their policy specifics following purchase. During this timeframe, typically lasting a fortnight to a month, individuals can pore over the conditions, coverage details, availability of Critical Illness Insurance riders4, policy inclusions and exclusions without the pressure of a final commitment.

They can terminate the policy within this window without any penalties or monetary loss if they ascertain that it does not meet their hopes or requirements. This feature bolsters consumer self-assurance, as it verifies that they can rethink their judgment.

Moreover, the free look period for health insurance represents a substantial customer safeguard. It ensures that policyholders are not locked into an agreement that they may later regret. This provision permits policy owners to cancel without repercussions if they detect any inaccuracies or have second thoughts about the plan's suitability.

It equally benefits insurance companies to some extent, as dissatisfied customers who may have filed avoidable claims in future are weeded out. In conclusion, the reflection period is valuable in upholding transparency and building trust in the insurance sector.

Features of the Free Look Period

Here are some important features of the free look period in health insurance that make it a blessing for new policymakers:

  • Easy Cancellation

Cancelling a health insurance policy during the free look period for health insurance is a straightforward and hassle-free process. Policyholders can simply notify the insurance company of their decision to cancel. This can be done through a cancellation request submission, and the process will be initiated. There are no cumbersome procedures involved. This ensures that policyholders withdraw from the plan if they find the policy unsuitable without any complications at all.

  • Enough Time Limit

The Free Look Period typically lasts 30 days, giving policyholders ample time to review the policy documents. This time frame is sufficient for them to understand the coverage details, terms, and conditions and seek clarification on any doubts. This extended period helps them make an informed decision and ensure the policy meets their healthcare needs.

  • Quick Submission

The cancellation request submission during the Free Look Period is a fast and efficient process. Policyholders need to submit an online or written request for cancellation within the stipulated period, and the insurance company processes it promptly. This quick submission ensures that policyholders do not have to wait for long periods to get their refund. They can then easily buy another suitable policy, making the whole process smooth and timely.

  • Requires Minimal Paperwork

Cancellation during the Free Look Period requires minimal paperwork. Policyholders are only required to provide basic information and an online or written or online request for cancellation. This approach reduces the administrative burden on the policyholder. It also speeds up the cancellation process, making it convenient and user-friendly.

Key Points about the Free Look Period in Health Insurance

Here are the key points to consider about the Free Look Period in health insurance:

  • Time Limit to Avail the Benefit

You must act fast if hoping to gain from the Free Look Provision — within a mere 15 days of receiving your policy documents. Should you opt to return the policy or request any alterations during this short window, be prepared to furnish proof of the policy issuance date in order to get the process rolling.

  • Policy Termination Request

To take advantage of the Free Look Period, a written request terminating the policy is mandatory. You must initiate an online cancellation procedure via a form submission through your insurer’s website or by calling the customer care number.

  • Providing Details

Policyholders wanting cancer coverage in the initial days itself need to share certain details. These include the exact date of receiving the paperwork and the name of the agent involved, if applicable. This prevents delays and helps in the seamless management of such requests.

  • Documentation for Policy Cancellation:

Submitting the original documents is essential to complete the cancellation process. You must provide the first premium payment receipt and a cancelled cheque for the refund. If the original document is not available, an Indemnity Bond will be required.

  • Do not Expect a Full Refund:

When a policy is cancelled the insurance provider refunds the premium only after deducting certain charges. These include charges for stamp duty and also the proportionate risk premium for the coverage period. The insurer also deducts expenses incurred for any medical tests conducted on you.

How to cancel a policy during the Free Look Period?

Here is the step-by-step procedure for policy cancellation during the free look period:

  • Step 1:

Contact your insurance agent or the customer care number of the insurance provider.

  • Step 2:

Communicate a valid reason for policy cancellation and provide a soft copy of all the necessary documents required to complete the procedure.

  • Step 3:

Share your correct bank account information to ensure a timely refund.

Amount deducted from the refund

When you cancel a health insurance policy, the insurer deducts some money from the refundable amount. Here are some common deductions you can expect so that you are not taken aback by any unanticipated expenses:

  • The prorated risk premium for the duration the policy was active.
  • The insurer incurred expenses for conducting your medical examinations.
  • All administrative charges and stamp duty.

The balance amount after the deductions is then transferred to your account in full.

Example: If Ms Charu decides to cancel her policy after 10 days, the insurer will deduct charges such as stamp duty, a prorated risk premium for those 10 days, and any costs incurred for her medical tests and refund the rest of the amount to her.

Summary

The Free Look Period in health insurance empowers policyholders with ample time to review and understand their policy. With easy cancellation and minimal paperwork, the free look period facilitates informed decision-making and protects consumers from unsuitable plans. In the overall scenario, it enhances satisfaction and confidence in their health insurance choices.

FAQs on Free Look Period in Health Insurance

Q. Can I get a free look period during policy renewal?

Usually the free look period is only available while purchasing a new policy. Policy renewals do not provide the option to review and cancel. Hence, it is advisable to carefully review the policy during the look-in period and proceed carefully.

Q. Why does a health insurance policy have a Free Look Period?

The free look period allows policyholders to review the terms and conditions before fully committing to a plan. This helps to reduce the risk of mis-selling and allows the policyholders to make informed decisions.

Q. What is the maximum free look period?

The free look period varies between 30 days. This gives the customers the flexibility to decide whether the plan purchased by them is worth investing in or not. In case the policyholder wishes to cancel, they will receive a full refund on the premium paid by them.

Q. What is a 30-day free look period?

A 30-day free lock-in period is an extended duration that gives policyholders more time to review the policy they plan to invest in. This extra period provides peace of mind and flexibility so customers can make informed decisions.

Q. How do you calculate the free look period?

The free-look period starts the day the policyholder receives the policy contract and is active for 30 days after that. If the customer decides to cancel their policy, they will receive a full refund minus minimal deductions.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Disclaimer

1. Annual Premium amount ₹ 1869 for Male aged 35 years, Base Benefit, 10 years term, Regular Pay option, Sum Assured=10 lakhs, excluding Taxes & levies as applicable.

2. Click 2 Protect Optima Secure (UIN : 101Y122V03) A Non-Linked Non Participating Combi Insurance Plan

3. HDFC Life Easy Health (UIN : 101N110V03) A Fixed Benefit Health Insurance Plan

4. For all details on Riders, kindly refer to the Rider Brochures available on our website.

ARN: DM/09/24/15244