- Date : 16/03/2015
- Read: 3 mins
A free-look period is a specified period within which you are allowed to cancel or make changes to a policy.
Once you have decided to take out a policy it is important that what you buy meets all your needs. All that said it might not always be possible to pre-examine every aspect and carefully weigh every clause that an insurance policy comes with.
It might only be after a policy is issued and policy documents are delivered, that you realize that the terms of the policy do not meet all your requirements and expectations.
This is where a Free-Look period comes handy.
What is a Free-look Period?
A free-look period is a specified period within which you are allowed to cancel or make changes to a policy. Most life and health insurance policies come with a free-look period ranging from 15 to 30 days.
What are the other advantages of the free-look period?
- Allows you to make changes or corrections to the policy
- Allows you to modify riders
- You can seek clarifications on the terms and conditions
- You can cancel the policy to get a refund
- You can take steps to safeguards yourself in case of mis selling
Is the Free-look Period applicable to all policies?
The free-look period is applicable only for life insurance policies and health insurance policies having a term of 3 years and above.
Will I get all my money back if I cancel the policy within the free-look period?
By cancelling your policy within the free-look period, you do get most of your premium as a refund. However, expenses towards medical examination, stamp duty, as well as a proportionate risk premium are deducted by the insurance company.
How can I best utilize the free-look Period?
Within the free-look period specified, a policyholder must:
- Check all the information, including names (life assured, nominee, guardian, etc.), birth dates, address, bank details, etc. for misspellings and errors. Seek corrections in the policy document if required.
- Read the terms, conditions, and caveats. Ask questions about the clauses you do not understand clearly.
- Confirm the sum assured, policy term, riders, etc. Ensure that the expected benefits complement your financial goals.
- Go through the inclusions and exclusions of the policy and discuss the details about the plan with the advisor or insurer.
In case you need to make changes, get those done within the free-look period. Always approach the insurer directly, as this will help save time.
Remember, it is better to do sufficient pre-purchase research about your policy so that there are no hassles like cancellation.