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All You Need To Know About A Free Look Period

dateKnowledge Centre Team dateDecember 30, 2020 views143 Views
All You Need To Know About A Free Look Period

While buying insurance policies, the free look period refers to a specific amount of time or a window within which the policyholders can terminate their chosen policy. In this period, no penalty fee is applicable for the policyholders. Generally, a free look period lasts for ten days or more, which allows a holder to decide whether they want to keep their policy or not. This period may vary according to the regulations of several insurers.

Many individuals usually associate a free look period with only a long term insurance plan or a life insurance policy. The Insurance Regulatory and Development Authority (IRDA) of India has included a free look period in health insurance policies. It is a consumer-friendly provision that is only available for these two sectors presently.

Insurance has always been a necessity. While there has been significant growth in health-related problems due to the pandemic, the importance of life and health insurance policies have increased crucially. Here's everything that you need to know about a free look period in insurance policies.

How Does a Free Look Period Work?

The free look period starts typically when the annuity policy gets delivered to you. A few of them will require you to sign a delivery receipt, but your clock will start as soon as you receive the policy. Also known as the free examination period, you can now understand or review the policy's terms and conditions carefully and thoroughly.

The days that get counted in a free look period are the calendar days, not the business days. This means that Saturdays and Sundays do get included in your free look period. During this period, a policy purchaser can even inquire to the insurer regarding any policy doubts. And if you're not satisfied after reviewing the terms and conditions, you can ultimately cancel the insurance policy.

It is essential to note here that a free look period is only available in the policies that have a term of at least three years in health policies. Other short term insurance plans in the health sector do come with the provision of a free look period. This is as per the rules and guidelines of IRDA.

What Are the Benefits of a Free Look Period?

There are various benefits of a free look period. A few of them include:

  • The main benefit of a free look period is the additional time it provides to policyholders, thus enabling a policyholder to review each term and condition of the policy they bought.
  • If a policyholder does not like specific terms or conditions of the policy, he/she can terminate it within the free look period to avoid an additional maintenance fee.
  • Within this free look period, you can also get a refund of a few of the premiums paid while buying a long term insurance plan.
  • One of the best features of a look free period is that you don't have to provide a necessary explanation as to why you want to cancel the policy. This can vary depending on the various insurance companies, but the customer service will not try to talk you out of cancellation. As long as you're following the time frame rules, you will get your money.
  • A free look period especially allows a policyholder to ensure that he/she wants to dedicate a part of their cash to cover administrative costs regularly.

How Can You Make the Most of Your Free Look Period?

While there are many advantages of a free look period, you must be aware of several other factors. These factors will help you to receive all the essential benefits provided by a free look period. Some of them include:

1. Give your correct details on the form.

When you purchase a long term insurance plan, remember to fill in the correct details of your address and contact number. This will ensure that you can explicitly listen to your plan's features and details during the mandatory welcome call.

2. Take the appropriate time to review the policy.

Generally, a policyholder has 15 days to understand all the details and conditions of the policy. Make efficient use of this time to look through the terms, communicate with your company agent, and make sure that you want to keep the policy.

3. Save the end date of your trial period in advance.

Keep track of the start and end date of your free look period. As soon as you receive the policy, your trial period will begin. Also, before you sign the receipt, always check the date. This is to ensure that you do not sign on a back-dated receipt. This can cut your 15-day free period and make you miss your cancellation period.

4. Properly communicate with your insurer.

If you have an issue with your policy, you need to communicate it in a written manner instead of oral communication. It is better to communicate in writing to a company, so they get a formal note from your side. At times, a few agents try to delay your side of information to end the free look period. In that case, you need to visit your insurer's office to submit a policy's cancellation.

5. Do not expect a full refund of your premiums.

Even if you cancel your long term insurance plan within a free look period, it is liable to expenses on stamp duty and medical tests. If the risk-cover service of your policy has already come into effect, an insurer can deduct the risk premium before cancelling your policy.

Can you cancel a policy during a free look period?

Yes, you can certainly terminate your policy plans if they do not match the requirements of your long-term insurance strategies. Solely designed for your benefits, a free look period serves the purpose of helping you decide whether you want the policy or not. To cancel a life or health insurance plan, you need to convey this message to your insurance provider. Once you do this, your agent will usually provide you with a few alternate options that can suit you. However, if you still do not wish to keep the policy, you can end it by filling up the cancellation form from the bank's official website or the bank's branch office.

Once the cancellation form is submitted to the bank, it will take a few days to process your request. Before you put in a cancellation request, make sure that you have the necessary details given below:

  • The date on which you received the official policy documents.
  • Complete contact information of the agent (if you have purchased the policy through an agent).
  • Reason for the cancellation of the long term insurance plan (if applicable).
  • A valid bank account to finally receive the refund.

A noteworthy point to keep in mind is that while it is possible to own multiple life insurance policies, it is more convenient to wait for the current policy to cancel before looking out for other options. If you apply for another policy at a new insurer, they may think you are trying to purchase more insurance policies than you need, thus declining your application. No amount of refunds will be made if you cancel your policy after the free look period.

What is the duration of a free look period?

The general term of a free look period is usually 15 days. In the case of policies bought online, free look periods can extend up to 30 days after receiving the policy documents. A few of the banks also provide extra free look periods for senior citizens. If a policyholder wishes to terminate the policy during this period, he/she has to take care of all the necessary documentation before filling the final cancellation plan.

Long term insurance plans can have a wide variety of benefits for the people. But, to ensure that you are thoroughly satisfied with your policies, you have to make the most of your free look period. Comprehend the terms and conditions of your chosen policy correctly, and communicate with your insurer if you have doubts. Also, always remember that you need to submit the original documents of premium receipts, cancelled cheques, etc. If the documents are not available, an Indemnity bond can also serve the same purpose.

It is also essential to note that only cancellation is allowed during a free look period in health and life insurance policies. If you want to port the policy, you have to wait for the time of renewal. When it comes to refunding the premiums, an insurer can deduct a few expenses to compensate for the company's charges. Therefore, a buyer must know the features and refund services before purchasing the policy or paying regular amounts to retain the chosen policy.

This will help him/her to properly reap the benefits of choosing a long term insurance plan and its free look period. You can find some of the best term insurance plans at our Canara HSBC Oriental Bank of Commerce Life Insurance. Get the chance to experience limited pay with tax benefits and lump-sum payout options with iSelect Star Term Plan

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term plan doesn't offer any payout after maturity or expiration date.

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 70 years of age.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, a term plan pays a part of the sum insured to treat your disease.

Term insurance riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term policy remains active until the expiration date.
  • Income Rider: The rider ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while buying Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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