What is Free Look Period?

The free look period is the period given to a policyholder to assess and review the policy document. You can terminate the policy during the free look period if you are not satisfied with its inclusion and exclusion terms which you were told at the time of purchase.

You can think of a free look period as a consumer-friendly provision formulated by Insurance Regulatory and Development Authority of India (IRDAI), allowing you to terminate a policy without penalty, such as surrender charge.

A free look period is defined by the regulator. It thus, allow you to decide whether or not to keep the policy for the time ahead.

You should also know that the free look period applies to both life insurance and health insurance policies. However, the related rules differ for each of these types of insurance policies. Hence, it is crucial to understand these differences before you buy any insurance policy.

Let us understand the concept of free look period with the help of an example –

Mr. Mehra recently bought a health insurance policy online and received the related documents in person. While going through its detailed terms and conditions, he found the policy does not fulfil his specific needs.

He does not like the policy, feeling it is not as good as expected. Since he has already paid the premium, what can he do now? Does he have to bear with the policy clauses that he does not like?

The answer to all such doubts is ‘No,’ as there is a free look period covering such instances.

Buy insurance policies can become confusing to many, especially those who do not know much about how insurance policies work. In most cases, people receive actual insurance contracts after paying the premium.

It is nearly impossible for you to review the actual insurance contract language without a free look period. Here, the purpose of a free look period in insurance is to provide you enough time to assess the policy wordings before you commit to paying the premiums.

Home inspection before purchase is a good analogy to understand free look period. To buy insurance without a free look period is like buying a new home without inspecting it beforehand. Although the insurers outline every benefit and limitations of an insurance policy, you can only check the finer nuances once you receive the physical policy document.

Although India's insurance industry follows a highly ethical approach in this regard, you, as a policy buyer, have a right to review the insurance contract before making a final decision. The free look period gives you the time you need for policy assessment.

In reality, many people trust the local insurance agents blindly and opt for an insurance policy they suggest without going into the details. In some cases, the insurance agents may try to convince people to buy an insurance policy that does not fit their needs well.

You should also consider free look period to get some ‘cool-off’ time away from an insurance agent or financial advisor. It is the time when you can look into the details of the policy from your perspective.

At Max Life Insurance, we educate the policy buyers first to help them choose the best insurance policy that matches their financial needs and life goals. By putting valuable information in their hands, we help them avoid the policy purchase's stress, thus ensuring utmost satisfaction. You can check the insurance premium online using our life insurance premium calculators.

Being a legal contract, an insurance policy grants certain rights and responsibilities to both the policy buyers and insurance companies. In simple words, you get the insurance benefits defined in the policy contract after paying the premiums as expected.

However, if the policy’s terms and conditions do not match as what you have agreed with insurer, you can choose to cancel the policy during the free look period. Furthermore, you should know that different insurers follow their pre-defined criteria to equate the amount paid back. The premium repayment is then done accordingly.

You can also utilize the free look period in insurance by clarifying your doubts and asking questions to the insurer you have selected. This can be done to understand the policy contract better, eliminating the need to terminate the policy. If you still feel dissatisfied with the policy, cancel the policy .

Also, the free look period for life insurance begins after you receive your policy contract. If you plan to cancel the policy during the free look period, being a senior citizen (above 60 years of age), an NRI customer, or if there is no local Max Life branch available in your city, log in to your Max Life account and submit your request for policy cancellation within free-look period.

Given below are some crucial details that you should know about free look period as per IRDAI:

• There is a free look period for life insurance policies, irrespective of the type
• As the policyholder, you can review the insurance policy in detail within the first 15 days of receiving the policy
• As a policyholder, you need to submit a request through the customer service section of the website. If you are an NRI customer, a senior citizen (above 60 years of age), or there is no Max Life Insurance branch located in your city, log in to your Max Life account and submit your request for policy cancellation within free-look period.
• On applying policy termination request, you will be asked to provide certain documents, including the policy contract received, premium receipt, and a cancelled cheque. Make sure you ask the chosen insurer about the documents required during the free look period.
• In case you fail to claim a refund with policy termination during the free look period, the following can happen:
• You will receive the premium refund less the expenses that your insurer has incurred on medical tests, stamp duty, and similar others.
• If you exercise the option to return the policy after the free look period, you will be charged a proportionate premium associated with the coverage during such a period. This deduction will happen on the refund amount before you receive it back.
• The refund calculation differs in case you have bought a Unit Linked Insurance Plan (ULIP). The insurance company is entitled to repurchase the units at the specific rate on the policy date after the free look period. This will be in addition to the deductions stated above.

Also Read: What is ULIP? How Does it Work?

Over the past few years the average Indian has improved their understanding of the need for life insurance as well as some of the key concepts of protection products such as the free look period and insurance riders. This has been witnessed in the Max Life IPQ 6.0 survey that was conducted jointly with Kantar. This improved understanding has resulted in an increase in the Knowledge Index recorded in the survey to 61 (as compared to 57 in the earlier IPQ 5.0).