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Tips to Make the Most of Free-Look Period in Insurance Research Team | Posted On Monday, May 27,2019, 05:15 PM

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Tips to Make the Most of Free-Look Period in Insurance



You must have availed a life insurance plan to protect your family. Term life insurance which is a type of life insurance is pure risk protection. You pay a premium for the sum assured on the term life plan. On death of the policyholder within the term of the plan, the nominees (wife and kids) get the sum assured called death benefits. This plan has no survival benefits. Term life insurance is the best among all life insurance plans.

Endowment life insurance offers insurance and savings. Unit Linked Insurance Plans or ULIPs offer insurance and investment. Now to the question. What if you are not satisfied with the life insurance plan? This is where Free-Look Period comes in.

In the free-look period, you (policyholder) can return the life insurance plan to the insurer, within 15 days from the receipt of policy documents. The onus is on you to prove the date of receipt of the policy documents. 

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Tips to Make the Most of Free-Look Period in Insurance

Why Free-Look Period?

The free-look period offers you an exit route from the life insurance plan. If you go through the finer points of the life insurance plan (Read the terms and conditions carefully), and you are not satisfied (do not match your expectations), you can return the life insurance plan within 15 days of the receipt of policy documents.

The free-look period protects you against mis-selling. The life insurance agent could have enticed you with a life insurance plan, while you receive a different plan. Intentional mis-selling can be controlled with the free- look period.

The life insurance plan is cancelled and the entire premium is refunded after deducting charges. Charges could be for medical tests of the policyholder, administrative and stamp duty charges and mortality charges for the time the life insurance plan was in force.  

See Also: Tips Before Buying Online Term Insurance Plan

Tips to Make Use of The Free-Look Period:

  • Always Fill the Right Contact Details on the Form:

When you avail the life insurance plan, make sure the contact details are correct and you fill them yourself in the application form. Don’t trust this important job to the life insurance agent.

Life insurance agents often give their mobile numbers. The mandatory welcome call comes to the life insurance agent and he answers the call, instead of you. Important details and features on the life insurance plan are conveyed during the welcome call. You get a chance to terminate the life insurance plan if features don’t match expectations.

  • Save the Delivery Date of the Life Insurance Plan

The 15 day free-look period commences from the time you receive the policy documents of the life insurance plan. Retain the envelope containing the policy documents of the life insurance plan, as it has the delivery date of the policy documents. Check the delivery date before signing the receipt. Never sign a back-dated receipt as this cuts your free-look period.

See Also: Term Insurance Plan - How to buy the Right Term Insurance Plan

  • Cancel the Life Insurance Plan Through the Insurer

Never trust the life insurance agent when it comes to cancelling the life insurance plan, within the free-look period. Many agents have withheld documents so that the free-look period expires, before you have a chance to cancel the life insurance plan.

Call the life insurer’s customer care and tell them of your intention to cancel the life insurance plan. Visit the life insurer’s office and submit the policy cancellation application. You would find the life insurance policy cancellation application on the insurer’s website. Download this, fill it up and submit it to the life insurer. Gets a time-stamped receipt acknowledging the acceptance of the application.

  • Understand the Refund Process for ULIPs

Let’s say you have availed a ULIP and want to return it within the free-look period. The insurer repurchases the units allotted by the insurer at the net asset value (NAV), on the day the life insurance plan got cancelled. Let’s say the premium was Rs 90 and the insurer deducted Rs 20 as charges. The remaining Rs 70 was invested in the ULIP. If the NAV has grown to Rs 75, the insurer would have to refund Rs 75 plus Rs 20. This is done after deducting stamp duty, mortality charges and so on, for the requisite period.

See Also: What Should Be the Duration of My Term Life Plan?

Policyholder Has Suffered Mis-Selling in Life Insurance:

If you are a victim of mis-selling, the 15 day free-look period is not applicable. You can return the life insurance plan, anytime during the policy tenure. However, don’t delay returning the plan. Greater the delay, more difficult is it to prove mis-selling of life insurance.

Do Research Before Availing the Life Insurance Plan:

Do your research before availing the life insurance plan. It’s no fun returning it during the free-look period. Use the free-look period only as a safety net. Never avail life insurance without doing adequate research. Take the help of a financial advisor if you cannot take a decision on the life insurance plan.

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