Often we end up buying an insurance policy at the insistence of the insurance agent. However, after the documents are signed and we get the policy in hand, we discover that the policy is of very little use to us. What do we do in such a scenario? Resign to fate and stick to the policy? Absolutely not! Thanks to the Insurance Regulatory and Development Authority (IRDA), policyholders now get a 15-day time span during which they can return the policy and get a refund.
This is called the free look period. The free look period is a great tool available to all insurance consumers. However, many people still do not know about the benefits and features of a free look period and as a result do not use it to their advantage. Read on to know all about the free look period of an insurance policy.
All that you need to know about the free look period
- Time limit - You can avail the free look period within the first 15 days of receiving the policy documents. After 15 days, you cannot return or change the policy. In such a case, you will have to surrender the policy.
- Informing the insurer - If you want to make use of the free look period, you need to inform the insurance company that you want to discontinue with the policy. This has to be done in writing and some insurers even ask for a form to be filled out. The forms are usually available from the company's website.
- Details - You need to provide the insurance company with details regarding the policy such as the date of receipt, policy number, agent details and reasons for returning the policy. To be able to receive the premium refund, you have to submit your address and information regarding your bank account. Apart from this, you have to attach a revenue stamp on the form and then sign.
- Documents required - In order to have the policy canceled within the free look period, you have to submit the original policy document. Along with that, you have to send in the FPR (first premium receipt) and a bond of indemnity. If you cannot find the original policy documents, you will have to send in a cancelled cheque.
- Kind of policy - Only life insurance policies and health plans that have been purchased for a period of at least 3 years have the feature of the free look period.
When to use the free look period
The free look period is a great tool, but you must use it with caution. Before you decide to cancel a policy, make sure you have a back up policy in place. Do not cancel a policy in the free look period if your agent convinces you that you better policy is available.
For all you know, the new policy may just have the exact same features. So read the documents carefully, assess your own needs and then see if the policy will suit your requirements. If you find an unsatisfactory result, make use of the free look period and return the policy.
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
For more articles by Deepak Yohannan, please visit MyInsuranceClub.com
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