What Are The Key Parameters And Benefits Of A Free-Look Period In Health Insurance?
20 July 2022
The free-look period is the timeframe within which a policyholder could choose to cancel their policy without paying any penalty, such as surrender charges. A free-look period can last 10 or more days, depending upon the insurer.
The policyholder can make the decision whether or not to keep the insurance policy during the free-look term; if they are dissatisfied and desire to cancel, the policy purchaser can receive a full refund. As per India’s Insurance Regulatory and Development Authority (IRDAI), insurance companies have to include a free-look period in their policies.
Continue reading to know more about free-look period and how it works.
What is a Free-look Period in Health Insurance?
Every insurance provider has an IRDA-approved provision that permits you, as a policyholder, to return the policy within a certain time frame. This is known as the ‘Free-look Period.’
Your free-look period starts from the very date you buy a policy. This timeline varies from policy to policy and could go up to 15 days. Policyholders are given this timeframe to review their policy thoroughly.
One noteworthy aspect is that calendar days are included in a free-look period, not the business days. This implies that the free-look period in health insurance comprises Saturdays and Sundays. The policy buyer can utilise this time to inquire the insurer about the doubts related to the policy. In the worst-case situation, if you are unhappy with the terms and conditions, you can cancel the insurance coverage.
The following sections deal with details of the Free-look period for health insurance.
Parameters of a Free-look Period in Health Insurance
The different parameters associated with the free-look period in health insurance include the following:
1) Time Limit
The policyholders can act upon the Free-look Period in health insurance and gain benefits within a stipulated timeframe. The free-look period is usually 15 days, starting from the day policy is received. Post the completion of 15 days, the free-look period of the policy ceases.
2) Cancellation Request
The free period feature helps you analyse the intricacies of the policy you opted for; if you are not comfortable with what you purchased, you can cancel it. All you have to do is coordinate with the insurance company and apply for a cancellation request. As per the convenience and insurer’s capabilities, this process can be performed either online or offline.
3) Submission of Details
Another aspect to keep in mind is submitting necessary details while applying for cancellation. This includes the date of receiving the policy, the reason for cancellation, bank account details for seamless transfer of money, and lastly, if the policy was purchased via an agent, one needs to provide the details of the facilitator.
4) Documentation process for Policy Cancellation
It is required to submit either certain original documents or copies of the documents to cancel the policy. These documents include a cancelled cheque, receipt of the premium paid, etc. If the policyholder cannot provide the required documents, the insurer might ask you to submit an indemnity bond.
5) Refund process
In case of a refund is initiated, one cannot expect a full amount on policy cancellation. The reason being the insurer will deduct a certain amount spent on a medical test and stamp duty charges, and then the refund is paid. The refund is initiated after all the conditions are verified in context to the free-look period.
Emphasising a few more benefits of the free-look period in health insurance includes the following:
1) Primarily, the free-look in insurance offers additional time to the policyholders. This enables a policyholder to carefully review each term and condition of the policy they bought.
2) If a policyholder disagrees with any of the policy’s terms or conditions, they have the option to cancel it during the free-look time. This helps to avoid having to pay an additional maintenance fee.
3) During this free-look period, you can also avail yourself of a refund of the premiums that you have paid while buying a long-term insurance plan.4) Lastly, a free-look period in health insurance ensures that a policyholder has agreed to allocate a part of their cash to regularly cover administrative costs.
Step-wise-Procedure to Cancel a Policy Within a Free-look Period
If one chooses to cancel the life or health insurance plan, all you need to do is convey this to your insurance provider. Once you take this step, your insurance provider will offer you a few alternate options that might work for you. However, suppose you still wish to discontinue the policy, you can cancel your account by filling out the cancellation form online at the bank’s website or offline at a branch office. Upon submission of the cancellation form to the bank, processing the request takes a few days. If you plan to avail yourself of free-look cancellation, ensure you provide the necessary details.
Don’t forget to mention the receiving date of the official policy documents.
If you have purchased the policy through an agent, provide the complete contact information of the agent.
State the reason for cancelling the long-term insurance plan if this applies.
Provide the valid bank account details to finally receive the refund amount.
How Does the Free-look Period Work in Health Insurance?
The free-look period offers numerous advantages, but several other factors are also associated with it. These factors shall enable you to understand the necessary benefits offered by the free-look period.
1. Ensure you enter the correct details on the form
Always remember to fill in the correct contact and address details whenever you purchase a term insurance plan. This ensures that you can succinctly listen to your plan’s features and details during the mandatory welcome call.
2. Review the policy carefully and take your time in doing this
In general, a policyholder is given 15 days to properly understand all the details and conditions related to the policy. Utilise this time well to look through the terms, ensure timely communication with the company agent, and most importantly, ensure you want to keep the policy.
3. Set in a reminder of the end date well in advance
It is of utmost importance to track the start and end date of your free-look period. The very moment you receive the policy marks the beginning of your trial period. Cross-check the date mentioned in the receipt, just in case it is not backdated. If it is backdated, it might cut down the 15- day trial period, and you might likely miss out on the cancellation period.
4. Communicate properly with your insurer
If you have an issue with your policy, you need to communicate well in writing rather than orally. This will help in proper formal communication of your concern related to the policy. There is a possibility that a few agents might try and delay timely communication so that the free-look period expires. In such cases, it’s better to go to the insurer’s office to cancel the insurance in person.
5. Don’t expect a full refund of the premium amount deposited
Even if the policyholder cancels the term insurance plan within the free-look period, expenses such as stamp duty and medical tests are likely imposed. If your health insurance policy’s risk-coverage service is activated, an insurer may deduct the risk premium before cancelling your policy.
The free-look period can be defined as the period given to a policyholder to assess the policy document closely. If you find a mismatch between the inclusion and exclusion terms you were told at the time of purchase, you can opt to terminate the policy during the free-look period of insurance. This write-up gives readers a comprehensive view of the free-look period in health insurance.
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FAQs on Free-look Period
Q1. How long is the free-look period?
Ans: Depending on the insurer, the free-look period lies between 10-30 days of your life insurance policy. It is the period when the contract holder can cancel the coverage without being penalised, and the policy purchaser can claim a full refund.
Q2. Is free-look period cancellation of the health insurance policy an option?
Ans: Yes, you can close your policy plans. In case you feel that the policy doesn’t match the requirements of your long-term insurance strategies. A free-look period in insurance helps you decide whether you want the policy or not and cancel accordingly.
Q3. Does an individual need to state a reason for free-look period cancellation?
Ans: Yes, when a policyholder submits a written request for the policy termination, he/she has to state the reason as well. In this case, the insurer gets informed to offer you other possible options and solutions. However, if you continue with the policy termination option, the amount will be refunded to you.
Q4. Is there an option to cancel the policy post Freelook period in health insurance?
Ans: After the free-look period, one can cancel the policy via surrender. One should take a keen look at the policy schedule for the exact charges depending on the years of paid-up premium. In most cases, if an individual cancels the policy in the first year, the premium is written off towards the surrender charges.
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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