‘Insurance is a subject matter of solicitation.’ We see this line in almost every advertisement and literature soliciting and/or canvassing Insurance. This means Insurance has to be solicited by us and after examining our risks the insurance company will provide us the risk coverage. While this is theoretical, on the ground we see a lot of push from various channels trying to sell insurance. Be it for friends and family obligation or due to lack of proper understanding the complexity of the insurance product we end up buying wrong insurance policies. If you have bought a new insurance policy and receive the policy document finding that the terms and conditions are not what you wanted. What do you do? Grin and bear it? Not at all. IRDAI has built into its regulations a consumer-friendly provision that takes care this problem.If you have bought a policy and realize you don’t want it you can return it and get a refund. This facility is termed as Free look period in Insurance.
Applicability of provisions
Though the Insurance regulator has introduced this consumer friendly provision,there are certain conditions to its applicability. Not all insurance policies have this free look period option. This applies only to Life insurance policies and to certain categories of Health insurance only. In Health Insurance this is applicable only for policies that are for a term of at least 3 years. The other insurance policies currently do not have the provision of this Free Look period.
Process of availing
The process to avail the option of free look period is prescribed by the regulatory guidelines to make this a transparent and standard process. One can exercise this option within 15 days of receiving the policy document. If insurance policy is bought online then the free look period is for 30 days of receiving the policy document. The communication cannot be oral and has to be in written to the insurance company. Many of us inform the insurance intermediary but this may not be enough. One has to communicate to the company in writing.
Refund and deductibles
If your policy is in the applicable category and you have communicated your intent to use the provision of free look period in the prescribed process, then you are eligible for the refund of premium paid. Here comes the question, Is all the premium paid is refundable ? or there any deductibles ? As per the regulatory guidelines the premium refund will be adjusted for proportionate risk premium for the period on cover. The insurer also reserves the right to deduct the expenses incurred, if any by the insurer on medical examination. In case of ULIP’s the refund will be based on the NAV (Unit Value). The insurer also may deduct stamp duty charges and pay the net amount post these deductions to the registered bank account of the Insured.
It is always advised to take a proper professional advice like that of a financial planner or an insurance expert before purchasing Insurance Policy. Always deal with registered insurance intermediaries only. A proper due diligence of the policy and its features is to be done before buying Insurance. In case of failure of any or all of these, we still can use the option of free look period as per the prescribed process with in the stipulated time. It is for the client to produce the proof of receipt of the document so it is advised to keep a record of the same.