Did you recently receive a spurious call from a fake insurance intermediary? Were you lured by his fake offers and bought an insurance policy? Then there are chances that it could be a case of insurance mis-selling. You don’t need to be worried. You can cancel the policy during the free look period.
What is a free look period?
In insurance, a free look period (also known as the free examination period) refers to the time given to a policyholder for a new policy to verify his policy document and confirm that whatever he was informed (at the time of purchase) is included in the terms and conditions of his policy.
If the policy was bought from a bank, agent, or any other physical intermediary, then a free look cancellation period will be 15 days from the date of receiving the policy document. An insurance policy bought telephonically or online (by web aggregators) will get 30 days of free-look period.
During this period, you can reconsider whether to continue the policy or cancel it without any penalties.
Note: A free look period is available for
- All life insurance policies
- Health insurance policies with a term period of atleast 3 years.
Free look Cancellation
During the free look period, you can cancel your policy. There can be many reasons for cancellation, some of these reasons are written below:
- Mis-sold an insurance policy.
- Found discrepancies in the terms & conditions of the policy.
- Not satisfied with the features, inclusions and exclusions of the policy.
There can be other reasons for disappointment. Inform your insurance company about your decision to cancel the policy with the reason for cancellation. A refund will be initiated by the insurance company after the cancellation application is processed by them.
Steps to cancel the insurance policy within the free-look period
- Submit the cancellation request form
To discontinue your insurance policy, fill out the cancellation request form. The form has to be filled with information like-
- Details of the policy
- Details of the insurance agent
- The date on which the policy document was received
- Reason for cancellation
After filling it out, submit it to your insurance company.
- Wait for the response from the insurance company
The company will contact you and try to resolve the issues that led you to apply for policy cancellation. If you are still not satisfied, the company will proceed with policy cancellation and initiate a refund.
- Premium refund
The insurance company will either transfer the refund directly to your bank or send you a cheque for a refund. There will be some deductions from the refund amount like the cost of stamp duty, cost incurred on the medical check-up by the insurer, and proportionate risk premium.
Can you cancel your insurance policy after a free look period?
Yes, you can terminate the contract by surrendering your policy. But in most cases, surrender values accumulate only in the third year which is lesser than one-third of the premium paid. Hence it does not make sense to pay a second-year premium if you intend to surrender. For example, if you have a yearly premium of Rs 1000 and pay a second-year premium of Rs1000 then you would receive a surrender value of Rs 700 which is lesser than the premium paid.
Therefore, it is advisable to always check and verify your insurance policy during the free-look period.
Note: If the policy was mis-sold to you, you can lodge a complaint with the Grievance Cell of IRDAI. You can also contact Insurance Samadhan to resolve your issue and get your money back.
A case where a customer fails to cancel the mis-sold insurance policy during the free-look period:
Mr. Ganesh was misled by a fake call, into purchasing an insurance policy in which the premium is to be given for 12 years offering an interest-free loan.
Mr. Ganesh was planning to start a business with his friend. He was convinced by the spurious call to purchase an insurance policy so that he can take a loan against such policy. He was informed that the loan amount will be equal to the death benefit. Also, this loan amount will be credited to him within 25 days from the date of receiving the policy document. He was told that he has to pay a premium for the term period of the policy i.e., 12 years.
After verifying the details from the company, Mr. Ganesh accepted the policy and received the policy document. The tele-caller updated him about everything for some time. He patiently waited for the loan amount to be credited to his account, but it never happened. After 20-25 days, he contact the tele-caller, but the tele-caller tried to avoid him and averted by giving excuses for 5-6 days.
He realized that it was a case of insurance mis-selling and fraud so he tried to reverse it and complained about it to the insurance company but they refused to do so as the free-look period has been ended.
On May 27, 2022, he approached Insurance Samadhan. We took his case after understanding and verifying every detail of the case. We assisted him with his case and supported him at every step of the procedure. We assured him that his case will be resolved in 3-6 months.
The case was resolved in 15-30 days and the money was credited to him. He appreciated our work and we are glad to help him and would love to resolve more insurance-based complaints.
Insurance Samadhan has helped 14,500+ people in resolving complaints related to insurance. Contact us to get samadhan for your insurance-related issues. We are always available to help you out.