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The Insurance Regulatory and Development Authority of India (IRDAI) increased the free-look period from 15 days to 30 days, with an aim of protecting the interest of insurance policies’ buyers. This change became applicable for both new life and individual health insurance policies from 1st April, 2024 onwards. The extension of the free look period was an important move by the insurance industry regulator. The 30-day period acts as a no-pressure grace period during which the policyholders can fully read their life and health insurance policies’ terms and conditions, and ensure they meet their needs.
To know what a free look period is, and its purpose, make sure you read this article till the end.
A free look period refers to a window wherein you can cancel your insurance policy without having to pay any surrender charges. If you return your policy within the free look period, the insurance company must refund your first premium.
In India, IRDAI has mandated all the insurance companies to provide the policyholders a free look period of 30 days for the life and health insurance policies purchased by them. This comes with the exception of policies having tenure of less than one year.
"Every policyholder of life and new individual health insurance policies, except for those policies with tenure of less than a year, shall be provided a free look period of 30 days beginning from the date of receipt of the policy document, whether received electronically or otherwise, to review the terms and conditions of such policy," IRDAI said in a notification dated 20.03.2024.
Before 1st April, 2024, the free look period of 30 days was only applicable on policies sold in electronic mode or through distance marketing. Physically sold policies had a 15 days free look period. However, since 1st April, 2024, all the insurance policies have a uniform free look period of 30 days in which the policyholders can cancel their policies and get a refund of the first premium or any charges paid by them for the policies. In the 30 days free look period, the subscribers do not have to pay any surrender charges.
The purpose of the free look period is that it protects the interest of the life and health insurance policyholders. The free look period safeguards their interest in the following ways:
The free look period allows policyholders extra time to compare their purchased insurance policy with other available insurance policies and plans in the market. Sometimes, policyholders may make quick decisions while choosing an insurance policy. For them, the free look period serves as a relief. During this period, they can surrender their current policy and opt for a new one without paying surrender charges.
If you have ever purchased an insurance policy, you must be aware of how difficult the procedure is. A lot of little details are contained within a policy document that might have a drastic impact on your insurance policy benefits. Even if you’ve invested a significant amount of time and effort in finding the best insurance plan before making a purchase, it still takes a while to thoroughly analyze a policy paper and understand its implications.
In order to minimize the possibility of confusion and misunderstandings, policyholders are also encouraged to study their policy documentation carefully and thoroughly during the free look period of 30 days.
The insurance policy documents are a formal agreement between the insurance company and the insured individual. During the free look period, you can cancel your policy and receive a refund if you feel like the policy purchased by you isn’t the best fit for you or if you feel like there was a miscommunication during the initial phases. In such situations, the free look period acts as a safety net.
If you want to cancel a purchased policy within the free look period of 30 days, you must follow the following steps:
Carefully go through all the terms and conditions of the policy.
Get in touch with the insurance company’s customer care. You can write a letter to them and submit a policy cancellation request explaining the reason for your cancellation.
Alternatively, you can approach the insurance broker from whom you purchased the policy to initiate the policy return within the free look period.
Thereafter, the insurance provider will send an approval for refund, and refund the policy premium within 7 working days.
You can give up your insurance policy after the free look period is over. However, after this period has passed, you will be charged a proportionate premium associated with the coverage during the ‘post-free look period’ However, in case of prepaid premiums, only the premium of coverage duration is deducted by the insurance company and the rest of the amount gets refunded to you.
Choosing the right insurance policy, especially for health, is extremely important. The free look period allows policyholders to choose the best insurance policies for them. It allows insured individuals to give up their policies without losing their hard-earned money on premiums already paid as this amount gets refunded during this period.
Every now and then, the insurance industry regulator IRDAI comes up with new rules and guidelines to protect the interests of the policyholders. The extension of the free look period from 15 days to 30 days will allow the insured individuals to make informed policy decisions, and opt for the insurance policies that best fit their needs.
If you want to sell insurance policies, connect with Registrationwala for assistance in obtaining an IRDAI license.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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