Free Look Period in Health Insurance

Free Look Period in Health Insurance

Once you have purchased your health insurance cover, it is important to thoroughly review its terms and conditions. While you may have reviewed the features of the health plan before purchase, it is equally critical to do so even after buying. This ensures you are protected under a comprehensive cover in the event of a medical emergency for you or your family.

However, if you are worried that your new health cover is not sufficient or you wish for a different policy, your worries end here. If you have recently purchased your health insurance policy, you have the liberty to cancel your policy and receive a refund. Read on to find out how.

What is the Free Look Period?

The free look period is a timeframe offered by a health insurance provider to new policyholders, allowing them to terminate their health plan without incurring penalties. A free look period often ranges between 15-30 days, depending on the insurer.

The IRDAI introduced this provision to protect customer interests, offering them the flexibility to decide if the newly purchased plan is worth their investment. If the policyholder is not satisfied with the health policy's terms and conditions and chooses to cancel it, they are entitled to a full refund of the premium paid, subject to nominal deductions.

How Does the Free Look Period Work?

After reviewing your policy documents, you might decide to terminate your policy post-purchase. As mentioned, in such cases, you can cancel your policy within the free look period specified by your insurance provider and receive a refund.

The free look period starts on the date you receive the policy contract. It remains active for 15 days (or 30 days), starting from the policy issuance date. Cancellations made during this period are refunded in full, except for minimal deductions.

Once you submit a request for policy cancellation during the free look period, the insurer will require your reason for cancellation, the policy contract, and other requisite documentation. Upon approval, the insurer is liable to refund the amount paid by you during purchase.

Benefits of the Free Look Period

The free look period in health insurance is an empowering feature for policyholders, allowing them to cancel their policy without losing their premium. It is a period during which individuals can decide to exit the insurance for any reason, saving money and avoiding unsatisfactory decisions. It is usually a better idea to cancel your health insurance coverage during the 15-day free look period than to be stuck with a policy that does not meet your needs.

An added benefit of the free look period in health insurance is that it allows customers to thoroughly review the terms and conditions of any health insurance policy. Policyholders can withdraw from the policy if they find any terms and conditions unsatisfactory.

Features of the Free Look Period in Health Insurance

The 15-day free look period in health insurance offers several advantageous features to customers, as listed below:

• Enough Time to Re-evaluate: Individuals have sufficient time to re-evaluate their decision to invest in a health insurance plan. They can withdraw if, after purchase, they feel it is not the right choice, without losing their premium amount.
• Online Cancellation: During the 15-day free look period, if you decide to withdraw from and cancel the policy, you can easily do so through the insurance provider's online portal without any hassle.
• Documentation Process: When applying for cancellation of the health insurance policy within the free look period, the insurer requires a few documents, such as a premium payment receipt, a cancelled cheque, or any other required document. However, the process is minimal and does not require a large number of documents, making it straightforward.

Procedure to Cancel a Policy Within the Free Look Period

To ensure a smooth cancellation process within the 15-day free look period in health insurance, follow these steps:

1. Read the terms and conditions of the policy after purchase.
2. Contact the insurance provider's customer care to submit your cancellation request within the free look period.
3. Policyholders can also reach out to the TPA involved during the policy purchase.
4. The insurance provider will review your cancellation request and then refund the premium amount paid within the free look period.

Things to Keep in Mind

Customers must keep a few points in mind when requesting cancellation during the 15-day free look period in health insurance:

• Provide a valid reason for cancellation.
• During the purchase of a health insurance policy, if the insurer offers a percentage for pre-policy health check-ups (if required), these charges are not refunded upon policy cancellation.
• While some health insurance policies have a 15-day free look period, for certain plans, this 15-day period is only applicable for a policy tenure of 3 years.

Deductions in the Refund Amount

Certain deductions (though not significant) may be made to the refund amount by the health insurance company. These include:

• The prorated risk premium for the number of days the policyholder was covered.
• Expenses incurred by the insurance company for medical examination.
• Stamp Duty and administrative charges.

The resulting amount, post deductions, is directly transferred to your registered bank account.

Let's illustrate this with an example.

Consider Manik, who lives in Delhi and buys a health insurance policy from XYZ Insurance Company. After signing up, Manik receives the health policy documents two 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 informs 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 depend on when the policy was cancelled. For instance:

• Within 1 Month: If you 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.
• Within 3 Months: If you 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.
• Within 6 Months: If you 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.
• After 6 Months: If you decide to cancel your policy after completing 6 months of the policy term, the insurer is not liable to pay any benefits to you.

Key Points to Remember Regarding the Free Look Period

• Time Limit: Under the free look period, any cancellation must be done within 15 to 30 days of receiving all policy documents. We advise you to check your insurance policy's terms to know the exact duration. You will need to submit proof of the start date to initiate the cancellation process.
• Renewal / Porting: Renewed policies do not include a free look period. Porting is also not allowed during this period.
• Cancellation Request: To initiate the cancellation process during the free look period, you must submit a handwritten request to your insurer. Alternatively, you might be able to start the process by filling out a form on the insurance company's official website, though this option depends entirely on the insurer.
• Credentials and Details: To initiate the cancellation process during this period, you will need to provide certain details required by the company. Usually, you can find the list of required details on the company's official website. Basic details include proof of the start date (date when you received the documents), information about the insurance agent (if involved), and the reason for cancellation. For the refund process, you will also need to provide your bank details.
• Documents: Some documents are essential to initiate the cancellation process. These include original policy documents, the first premium payment receipt, a cancelled cheque, etc. Your insurer might require other documents as well. Check their official website or connect with customer care for the complete list.
• Partial Refund: The cancellation refund, even during the free look period, is not 100%. The insurer will likely deduct 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 ensure you read all scheme-related documents carefully to make an informed decision. If, after that, you feel the need to change your decision, you can avail the benefits of the free look period and cancel your insurance anytime within the duration.