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What is free-look period in insurance policies?

You would have probably heard about the free-look period w.r.t. insurance policies.

In simple terms, free-look period is the time given to you after you have bought the policy, to request for its cancellation and refund of premium, if you find that the terms and conditions of the policy are not in line with your requirements or prior understanding.

Needless to mention, this free-look period comes with certain procedure and conditions.

a) The facility of Free-look is only for Life Insurance Policies and those Health Insurance Policies that have a term of at least 3 years

b) You get 15-days from the date of receipt of the policy to ask for the cancellation

c) This request must be sent to the insurance company in writing with all the necessary policy / bank details and revenue stamp of Re.1 affixed on the form. (Many companies have a free-look form available on their website.)

d) Certain deductions would be made from the premium viz.
    - proportionate risk premium for the period the cover is in force
    - expenses incurred by the insurance company on medical examination, if any
    - stamp duty charges

e) In case of ULIPs, the refund amount will depend on the NAV of the fund prevailing on the date of cancellation

f) Documents to be submitted would include among others the original policy document, first premium receipt and a cancelled cheque  

Free-look period is very critical and you MUST READ the policy documents and act within 15-days so as to ensure that what you have received is what you desired. It is the opportunity provided to you to save yourself from becoming a victim of mis-selling.   

Beware... the policy in detail BEFORE buying one instead of waiting for the free-look period
...every effort would be made to prevent you (or delay you) from cancelling the policy; so be very proactive and diligent in completing all the formalities.

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