All television infomercials have one thing in common. They all promise a free trial period with a money-back guarantee. If you are not satisfied with the product, you can return it and get your money back within this period.
The same principle is used in free-look period when it comes to insurance. It’s possible that after buying an insurance policy, you realize that you are not satisfied with it. As per the Insurance Regulatory and Development Authority (Irda), you really need not worry in such a situation because you can simply return the policy within this 15-day free-look period.
But as in life, in insurance too, things are easier said than done. When you return the insurance policy within the first 15 days, you will simply have to give up the underwriting costs, said a story published in Business Standard, today. So, there is a good possibility that you might not get back the exact amount you paid as your premium. The insurer could charge you for administrative charges, medical test expenses and the like.
The next thing to keep in mind is that since it’s just a 15-day period, many a times, your policy arrives only after the mandatory 15 day period is over. The insurance company will ask you for the reason of cancellation.
"Often requests for cancelling are associated with pricing. Sometimes an agent may sell a particular policy to a customer without explaining all the details. And if another agent promises a similar product at a lower premium, the customer may ask for the policy to be cancelled," says Ashvin Parekh, partner-national leader, Ernst & Young, in the Business Standard report.
To make the most of the free look-up period, ensure that you use those 15 days to go through the policy documents and thoroughly understand the financial product you have invested in. Read the whole Business Standard story here.
We agree that the free look period should be taken to understand the terms of the policy. But you need not take 15 days to do so. Remember that cancellation of policy might seem easy, but in reality, it's a task; you will need to fill forms, make a few calls to the call centre and send your original policy documents back to the insurance company. So it’s best to start as early as possible and ensure that you follow up the process properly, and not start in the last minute.
Reading and understanding the policy documents is very important. Do not shy away from doing this for silly reasons like the print is too small and difficult to read. Today, all policy documents and wording are available at the insurance company’s website and you can adjust the font size to read them. As far as the insurer’s asking for the reason for cancellation goes, remember you are under no obligation to give a reason. Also keep in mind that the 15-day period starts from the day you get the policy in your hand.