What is the Free Look Period?

 

Designed to financially protect your family in your absence, life insurance these days has become a popular choice of investment. While buying a life insurance plan, you might be confused by several plan options offering varied features and benefits along with different sets of terms and conditions. The trick here is to pick the one that best fits your affordability and financial goals. But what if you realise that the terms and conditions are not appropriate for your needs after the purchase is complete? Here’s where the free look period can be your way out.

Wondering how? The free look period specified in the policy plan allows you to return a recently purchased life insurance policy without paying charges and get a refund of your money. Designed by the Insurance Regulatory and Development Authority of India (IRDAI), this is a benefit provided to the new policyholders to spare them from spending money on a wrong choice of financial instrument. Before we delve deeper into the concept, let us start with understanding what a free look period is.

Definition of the free look period

In formal terms, free look period refers to a time window starting right after an insurance purchase, within which you can return the policy and get back the first premium paid. Typically ranging between 15-30 days from the day of receiving the policy, the free look period ensures you can return a recently bought policy if you don’t find its terms and conditions desirable, without paying any cancellation or surrender fee. This window is created to help the new policyholders carefully look into the policy document and check whether it properly matches their respective needs and financial goals. And hence, the name. However, this feature is usually available in life insurance and health insurance policy only. Knowing about its existence can thus save you from the unwanted hassles of continuing with an undesirable policy.

Why should we opt for a free look period?

While choosing between insurance plan options, we often rely on broad descriptions of benefits, inclusions and exclusions, mentioned on the website or as told by the insurance agent. Based on that, we ended up making the purchase. However, when the physical policy copy arrives, an explicit read of the terms and conditions might reveal that you have chosen a policy or it doesn’t fully match your expectations. This is where the free look period comes to your aid, providing a scope to get rid of the wrong choice without incurring a loss.

Within the free look period, you get an opportunity to read the policy document carefully and match it to your needs and expectations to check if you have purchased the right policy. Now, if the policy seems a mismatch or below expectations, returning it within this period won’t require paying any surrender or cancellation charge. Alongside, you can get a refund of your payment as per the related policy clause. This makes it worth opting for the free look period if you dislike the recently purchased policy.

How does free look period work?

Typically crafted to provide financial protection, life insurance or a health insurance policy is a legal contract between the policyholder and the insurance company, binding each with specific responsibilities. Here, the policyholder’s responsibility is to pay the premiums while that of the insurer is to provide the policy benefits. If you are dissatisfied with the policy after going through the clauses, terms and conditions in detail, the free look period offers you a window in which to return it to the company free of cost. You can also ask your insurer for further explanation of the terms and conditions specified, if needed, within this period. This is indeed a welcome step as it might clear your doubts and save you from returning the policy unnecessarily and losing out on its benefits.  

If you choose to return the newly purchased policy within the free look period, the insurance company is bound to give you a refund. This amount can be either a full refund of the premium, the value of the policy at that point or as specified in the related clause. Beyond this period, termination of a policy will require payment of specified charges or a deduction of the first premium paid.

Important information related to the free look period

To avoid losses of paying premiums for a policy that doesn’t suit your needs, here’s a set of important points worth keeping in mind.

• Every type of life insurance comes with a free look period, the length of which can vary across companies or government laws. According to IRDAI rules, the free look period should be at least 15 days long. However, some insurance companies extend the period up to 30 days.  

• You can review the purchased insurance plan within the first 15 days of the receipt of the policy document and seek clarification from the insurer. 

• To return the policy within the free look period, you can submit a request through the customer service segment of the insurance company's website or visit their nearest branch.

• Termination of the policy requires submission of the policy agreement and certain other documents. Make sure to ask the insurer about the documents needed.

• If you try to surrender your policy and seek a refund beyond the free look period, you can get a portion of the first premium deducted. This deduction can be the expenses incurred by the insurer on medical tests, stamp duty or related costs. Also, a proportion of the first premium going to the coverage will be deducted from the refund amount.

• In case of the termination of a Unit Linked Insurance Plan (ULIP) policy after the free look period is over, the insurance company will buy back the units at a specific rate. This charge will be added to the deduction amount.

FAQs about the free look period

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

A 30-day free look period means a provision by the insurance company to cancel the policy free of cost within 30 days from the start of its coverage.

Q. What is the free look period of a contract?

A free look period is a 10 to 30-day window starting from the receipt of an insurance policy. Within this period, a new policyholder can terminate the policy and get a refund of the first premium paid.  

Q. Do I need to state the reason for cancelling a policy during the free look period?

Yes, you need to state the reason to cancel the policy. Based on this, the insurance company will try to come up with solutions. However, if you are still dissatisfied, you can choose to terminate the policy and seek a refund.

Q. What are the most important aspects of the free look period?

The most important aspects of the free look period are: i) It provides a scope to review the policy and terminate it if you are dissatisfied. ii) You can get a refund of the first premium paid subject to the related clause.

Q. How do I submit a request to freelook my policy?

You can submit a request for a free look at your policy by visiting the nearest branch of your insurance company or through the customer service section of the company website.

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