Every insurance policy has a free look period. The free look period is the amount of time a life assured has to look over the policy documents. During this time, the policyholder has the option to cancel the plan if they are not happy with the T&Cs and features of the policy that were told to them when they bought it.
Simply put, this period gives you an opportunity to decide if you want to keep the policy or not.
With the help of an example, let’s look at how the free look period works:
Rahul recently bought a life insurance plan online, and the insurance company sent him all the necessary paperwork. He looked at the plan’s terms and conditions and found that the benefits of the life insurance plan didn’t meet his needs. He didn’t like the policy and didn’t think it was suitable for him. Does he have to agree to all the parts he doesn’t like? The answer to all of these questions is “No,” because all of these situations are covered by a free look period.
How does a free look period work in life insurance?
Life insurance is a plan that gives both policyholders and insurers certain responsibilities and rights. To put it simply, a policyholder gets the benefits of the life insurance policy listed in the documents after paying the premiums. A life insurance premium calculator helps one calculate the premium amount that they may have to pay after inputting all data. During the free look period, the policyholder can cancel the policy if the terms and conditions do not meet their needs. Also, different insurance companies have different rules about how they will return the amount paid. One can also use the free look period for life insurance to ask questions and get answers from the insurance company they choose. If the buyer still isn’t happy with the policy, they can ask for it to be cancelled.
A policyholder can cancel the policy and get a refund if, while reading the policy document, they find any kind of inconsistency or discrepancy in the policy’s terms and conditions or are not happy with the features and benefits of the life insurance policy. A free look cancellation is another name for this. Since Rahul is an intelligent person with money and already knows about the free look period, he can ask for the policy to be cancelled and get his money back.
How long does a free look period usually last in a life insurance plan?
In life insurance, a free look period usually lasts 15 days. If you buy the plan online, you have up to 30 days to change your mind after getting the policy papers. Some insurers also give senior citizens an extra period of time to look around without charging them. During this time, if a life assured wants to cancel the plan, they have to make sure they have all the essential papers before filling out the cancellation form.
Here’s how to get out of a life insurance policy during the free look period:
If the plan doesn’t meet the life assured’s requirements, it can be cancelled within the free look period. If one wants to cancel a life insurance plan, one needs to let the insurance company know. Then, their agent will usually give them some options that could work. But if someone still doesn’t want to keep the plan, all they have to do is fill out the cancellation form on the insurer’s branch website. After the cancellation form is sent in, the insurer branch takes care of the request. Before submitting the cancellation request, the policyholder needs to make sure they have the following:
- The date they got the policy’s official papers.
- Information about the agent if the policy was bought through an agent
- Information about why the long-term plan had to be scrapped
- A valid bank account to get your money back.
Will I get the full amount back if I cancel?
No, an amount would be deducted. The insurance company will take out the following fees:
- Taxes during that time
- Any extra premium paid (if available)
- Medical exam costs that were paid by the insurance company
- Processing fees and other related charges
All taxes on the insurance policy depend on whether the policyholder has opted for the old or new tax regime.