Policyholder Can Cancel Term Insurance During Free look Period
Have you ever been unsure about the policy you are opting for? Naturally, questions regarding the benefits and coverage come to your head. This is where the free look period can help you.
What is the free look period?
The free look period is a window of time when you can review your policy. During this period, you can cancel the policy without any penalty or charge. The law allows 15 days (30 days for an online policy) as the free look period. This applies to all life insurance policies.
How does the cancellation work?
Let us suppose you purchased a term insurance policy. You are, however, unsure about the benefits that this will provide. What if the policy does not cover your needs? In the absence of the free look period, you would have had to take a chance and make an irreversible decision. But now, you have the option of trying out the policy.
If, within this period, you are convinced that the particular policy is not for you, cancel it! But how do you do that? Let us understand how:
Read the fine print
After receiving the policy papers, start by reading the details. While the insurance provider will give you an overview of all the facts, it is better to understand the intricacies yourself. This will help you figure out whether all your needs are being met. If you feel that the policy is not for you, communicate your dissatisfaction.
Start the process
To cancel your policy within the free look period, start by reaching out to the insurer. You can contact the customer care service, and fill out a written form. Another way to do this is by applying for cancellation online. This is surely an easier and more convenient way.
One very important thing is proving the date of receiving the policy documents. This is because the free look period begins from this date. The window of cancellation is determined thereof.
On receiving such a request, the insurance company may ask questions regarding the reasons for cancellation. This is done in an attempt to resolve the issues faced by the policyholder. If after furnishing the required details you are still dissatisfied, carry on with the process.
Provide the documents
Providing the original documents is a must for completing the cancellation. These include the policy contact received, receipt of the premium paid, and a cancelled cheque. In case of unavailability of original documents, an indemnity bond should be attached.
If you have obtained the policy through an agent, you must declare the details of the agency as well. Further, to receive the refund of the first premium, the provision of valid bank account details is necessary.
For getting a list of all other specific documents required by your insurance provider, visit their website. You may also contact their customer service to make the process seamless.
Wait for the refund to be processed
On average, the refund process takes about 7-10 days. This includes verification of all documents and details. The online process is a faster mode to get through with the cancellation. However, this period can extend if an unwanted hindrance comes up. Overall, the process is quick and easy. The insurance providers focus on customer service so the policyholder can proceed without difficulty.
What is refunded after Cancelling Term Insurance?
The entire premium is not refunded when the policy is cancelled. The insurer is entitled to deduct certain elements before returning the dues. The three main things that are kept in mind are:
- Any expenses incurred towards conducting medical exams are reduced.
- The stamp duty paid by the insurer is also deducted.
- The proportionate premium for providing risk coverage is calculated. This is for the number of days the policy was in force. The amount so determined is also reduced.
After the amount is calculated, the insurer processes the refund.
The free look period is very beneficial for the policyholders. It enables getting an in-depth understanding of the policy and provides maximum benefit to policyholders. It allows for altering the terms so that the policyholder finds complete satisfaction. The cancellation process is also smooth and straightforward. So before you buy any policy, make sure you are aware of all details regarding the free look period. Take time to read the fine print and keep your documents safe and handy. You never know when you may need them!