Free Look Period in Health Insurance
Once you have bought your Health Insurance Cover, it is important that you thoroughly review the terms and conditions associated with it. While you may have gone through the features of the Health Plan prior to making a purchase, it is equally critical that you do so even after buying. This will help you rest assured knowing that you are protected under a comprehensive cover in the event that any medical emergency befalls you or your family.
However, are you now worried that your new Health Cover is not sufficient to meet your requirements? Do you find yourself wishing for a different policy? If yes, then your worries end here. You should know that if you have recently bought your Health Insurance Policy, you have the liberty to cancel your policy and also get back what you paid for it. Read along to find how.
What is the Free Look Period?
The free look period is the time period offered by a Health Insurance Provider to new policyholders, during which s(he) can terminate the Health Plan without incurring any penalties. A free look period often ranges between 15-30 days, depending on the insurer.
The IRDAI introduced this provision in line with the interests of customers to offer them the flexibility to decide whether or not the newly bought plan is worth their investment. In situations wherein the policyholder is not satisfied with the terms and conditions of the health policy and chooses to cancel it, they are entitled to receive a full refund on the premium paid, subject to nominal deductions.
How does it work?
After reviewing your policy documents, you might find yourself wanting to terminate your policy post-purchase. As mentioned above, in these cases, you can cancel your policy in the Free Look Period specified by your Insurance Provider and receive your payments back.
The free look period starts on the date of receipt of the policy contract. From the date of policy issuance till 15 days (or 30 days) after, the free look period remains active. Cancellations made during this period are refunded in full (except for minimal deductions).
Once you intimate the request for policy cancellation during the Free Look Period, the Insurer will need your reason for cancellation, policy-related contract, and other requisite documentation. Upon approval, the Insurer is liable to pay back any amount paid by you during purchase.
Deductions in the Refund Amount
Certain deductions (although not significant) can be made to the refund amount by the Health Insurance Company. These are -
- The prorated risk premium for the number of days the policyholder was covered
- Expenses incurred by the insurance company on medical examination
- Stamp Duty and Administrative charges
The resulting amount post deductions are directly transferred to your registered bank account.
Let’s work this through with the help of an example.
Let's consider Manik who lives in Delhi, buys a Health Insurance policy from an XYZ Insurance Company. Post signing-up, Manik receives the health policy documents 2 days later. Given that the Insurance Company has set the free look period at 15 days, Manik can cancel his Health Plan during this period to receive a refund.
During this period, Manik carefully reviews his policy. On the 10th day, he decides to terminate the policy and follows it up with the Insurer. The Insurer asks him to submit certain documents. After verifying the details, the Insurer refunds the premium paid by Manik to his bank account, after deducting the prorated risk premium for 10 days and other charges discussed above.
Policy Cancellation after the Free Look Period
If you choose to cancel after the Free Look Period, the refund amount will be subject to the time when the policy was cancelled. For instance -
- Within 1 monthIf you were to cancel your policy within 1 month after the completion of the Free Look Period, you are eligible to receive up to 75% of the premium amount paid by you.
- Within 3 monthsIf you were to cancel your policy within 3 months after the completion of the Free Look Period, you are eligible to receive up to 50% of the premium amount paid by you.
- Within 6 monthsIf you were to cancel your policy within 6 months after the completion of the Free Look Period, you are eligible to receive up to 25% of the premium amount paid by you.
- After 6 monthsIn case you decide to cancel your policy on completing 6 months of the policy term, the Insurer is not liable to pay any benefits to you.
Key Points to Remember
If you choose to cancel after the Free Look Period, the refund amount will be subject to the time when the policy was cancelled. For instance -
- Time Limit:Under the free look period, any cancellation has to be done within 15 to 30 days of receiving all the policy documents. We advise you to look into the terms of your insurance policy to know the exact duration of this period. You will be required to submit proof of the starting date in order to initiate the cancellation process.
- Renewal / Porting:Renewed policies do not come with a Free Look Period. Porting is also not allowed during this period.
- Cancellation Request:In order to initiate the cancellation process during the free-look period, you are required to submit a handwritten request to your insurer. Alternatively, you might be able to kickstart the process by filling up a form on the official website of the insurance company. But this option is subject entirely to the insurer.
- Credentials and Details:To initiate the cancellation process during this period, you will need to produce certain details required by the company. Usually, you can find the list of required details on the company’s official website. The basic details required for this process include proof of start date (date when you received the documents), information about the insurance agent (if involved), the reason for cancellation, etc. For the refund process, you will need to provide your bank details as well.
- Documents:There are some documents essential to initiate the cancellation process. These include original documents, receipt of first premium payment, cancelled cheque, etc. Your insurer might require some other documents as well. Check for the list on their official website or connect with customer care to get the list of necessary documents.
- Partial Refund:The cancellation refund even during the free-look period is not 100%. The insurer will most likely cut a minimal fee for charges incurred on stamp duty, medical tests, the proportionate risk premium for the coverage period, etc. Whether you buy health insurance online or from an agent, always make sure you read all the scheme related documents carefully to make an informed decision. If after that you feel the need to change your decision, go ahead and avail the benefits of the free-look period and cancel your insurance anytime within the duration.
