Free Look Period in Insurance – Benefit & Process

By
Hemant Beniwal
28

Insurance is like marriage, a long term commitment. And, when it comes to marriage if you get a wrong life-partner, entire life becomes a tale of adjustments. But the good news is if you have landed yourself into a wrong/not -required policy contract, the Free Look Period clause comes to your rescue. Free Look Period facility is a great tool to avoid the mis-selling of insurance and has saved lot of people from dragging on to something they do not want to continue or require. But remember this friend is there for only 15 days.

Free Look Period in Insurance – Benefit & Process

What is a Free Look Period in Insurance?

A policy holder can return the policy back to the insurer within 15 days from the receipt of the policy documents. This can be done only for Life and Health policies.

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Benefits of Free Look Period

  • In case the customer feels he has not received what was being told or discussed with the agent he has an exit route through Free Look Period. He can go through the finer details of the contract and if not satisfied can return the policy.
  • In cases of mis-selling, Free Look Period is used to safeguard the customer’s interest. There have been cases where customer has been explained a different policy and he receives a different policy or customer gives cheques for FD to a banker and he receives a single premium policy. Intentional mis-selling can be controlled through the Free Look Period facility.

Deductions while applying for Free Look Period withdrawal

In case of Free Look Period withdrawal, the policy gets cancelled and entire premium is paid back to the investor deducting following things:

  1. Charges incurred by the insurer for medical tests of the policy holder.
  2. Administrative and service cost like stamp duty etc.
  3. Charges for mortality for the period the policy was in force.

In case of ULIPs the policy holder will have to bear the NAV movement.

Procedure of using Free Look Period

In case you wish to return the policy, immediately call the insurer customer service department and enquire about the procedure. They may ask for the return of the original policy contract and the cancellation form. You may also visit the local branch in person to do the required formalities.

Catch here….

1)      It has been noticed that some insurers send the policy documents to the Agent. And in case of hanky-panky business the agent makes sure that he delivers you the documents only after the expiry of 15 days. Make sure that you follow up with the agent and get the documents on time.

2)      Once you have expressed interest of not carrying further with the policy, agent will try to counter and will try to linger on certain days promising you to “get rectified” or “will provide details” kind of excuses. In a scene like this, keep track of the days and go directly to the insurer and submit back the policy.

3)      Insurers have different procedures for this facility. Some insist on informing the call-center and some have specified format. It is better to get details of the procedure and act accordingly.

4)      Do keep margin for the transit time. There can be postal/courier delays etc.. Act well in time and take care that you do not goof up with the deadline. Do collect POD or acknowledgement once you surrender the policy so that if required in future you have evidences to fight in case insurer rejects your Free Look Period request.

But as they say, “Be aware”. It is better to let your agent know in the first meeting itself, that you know all about the Free Look Period clause. Enlighten him that if he tries to conceal or mis-represent you will exercise your right.

And as mentioned in the opening line, for those who are still thinking about Free Look Period facility in marriage, my sincere apologies and best wishes. Do share your Free Look Period (insurance related and not your marriage related) experiences/concerns/queries in the comments section.

Few Important Points shared by Abhinav Gullechha

  • In case a policyholder has suffered from mis selling, limit of 15 days is not applicable. He can come back anytime during the policy tenure, however, it is advisable to write to insurance company as soon as the mis selling is noted. The greater the delay, it gets more difficult to prove the fact of mis selling…
  • In case of Freelook, it is advisable to directly contact/ write to the customer care rather than depending on the agent. In case the agent delays the case, it may be difficult to explain the delay to insurance company, in absence of any documentary evidence/ correspondence with the agent.
  • On the policyholder’s part, it’s a good idea to make a note of the policy received date on the face of the policy document, as it can greatly help in tracking for Freelook, if need arises
  • Freelook option must not be misconstrued as an option that allows the policyholder in being lax at the time of product selection. Prospect should do his/her own due diligence at time of product selection. Its no great fun wasting all the time in the world applying for a product without adequate research and then making a Freelook claim. And yes, if one cant make the choice himself, its better to take expert advice.

Must share Free Look Period concept with your friends – let’s save few more financial lives.

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28 COMMENTS

  1. Hi Hemant,

    A very nice article. Thanks for sharing this information. I was not aware of it. It will definitely help lot of people.
    I have shared this with my friends.

    Regards,
    Deepali

  4. A free look-up clause should be included in marriage too! Will save a lot of trouble for a lot of people…look-up should be for a year 🙂

    • Manirul,

      As already mentioned in the article, we should not wait for agent. We should directly contact to insurer.

  6. Hi Hemant

    Thanks for the informative post. Freelook is a very customer friendly option to the end consumer which empowers the customer to review the suitability of product post purchase and return if found unsuitable.

    Have two points to add:

    • In case a policyholder has suffered from mis selling, limit of 15 days is not applicable. He can come back anytime during the policy tenure, however, it is advisable to write to insurance company as soon as the mis selling is noted. The greater the delay, it gets more difficult to prove the fact of mis selling…
    • In case of Freelook, it is advisable to directly contact/ write to the customer care rather than depending on the agent. In case the agent delays the case, it may be difficult to explain the delay to insurance company, in absence of any documentary evidence/ correspondence with the agent.

    • On the policyholder’s part, it’s a good idea to make a note of the policy received date on the face of the policy document, as it can greatly help in tracking for Freelook, if need arises

    • Freelook option must not be misconstrued as an option that allows the policyholder in being lax at the time of product selection. Prospect should do his/her own due diligence at time of product selection. Its no great fun wasting all the time in the world applying for a product without adequate research and then making a Freelook claim. And yes, if one cant make the choice himself, its better to take expert advice.

  7. Dear Sir,

    I want information about Jeevan Saral Policy of LIC. I have heard a lot about this policy for long time investment that it yields a fixed and handsome value. Is it ?

    Regards,
    Hemant Kumar

  8. Very informative article Hemant. I am sure it will increase awareness among the readers and they can benefit from the free look period.

    I have a query regarding below point shared by Abhinav: –
    “it is advisable to directly contact/ write to the customer care rather than depending on the agent.”

    Would the company accept the direct route? In my experience [not with insurance but another financial product] if you have purchased a product from an agent, company tells to come via agent and not directly. Can they do that?

    • Dear Vivek,

      No the company cannot say that in insurance domain.Although some financial products may be only agent driven but still company cannot deny entertaining customers at their office.

  9. Hi,

    I am 25years old, pursuing my Masters now.
    Had a query regarding the BSLI Ulip plan : Dream Plan-Life Cvg-Opt 100% -Term 20 ( enhancer). Its for 20yrs and am paying a premium of 35k pa. It has a basic sum assured of 5lacs and Guaranteed Maturity benefit of 8.6Lacs. Now i have learnt through the articles that investing in ULIP’s is not advisable and costly. But my query is:
    1) Its been three years ( 2009 to 2012) now for the policy and the lock in period is around Nov’12. Should i pay the premium for the year 2012 and once the lockin period is done , shall i opt out of it or continue with the plan?
    2) What will happen if i stop paying the premium after the lockin period.
    (Also doing a basic math 35k pa for 20years = 7Lacs and will receive GMB of 8.6lacs around 20% return.)
    3) Can u suggest me good term plans where i can have life-insurance cover and maybe also think about retirement planning.

    Many Thanks
    Sivaram

  11. POLICY SA PREM./ANNUM
    Relience Life Highest NAV RG Plan 750000 25000 – NANAK
    Reliance Market Retn Plan 2 regular 580000 10000 – NANAK
    Reliance Market return plan regular 50000 10000 – NIYATI
    ICICIPru Life Time 600000 20000 – NANAK
    ICICIPru Life time gold 400000 20000 – ARTI
    Bajaj Allianz Capital Unit Gain 408000 12000 – NANAK
    Allianz Bajaj Unit Gain Plan 300000 20000 – ARTI
    Bajaj allianz Unitgain plus Gold 504000 12000 – NANAK

    Dear Sir,
    My nAme is Nanak, wife- ARTI, daughter – NIYATI
    I HAVE ABOVE POLICIES. For most of above policies, I have paid 3-4 intallments and now the policies are on Holidays… continuing to cover Risk. I seek your advise, should I pay the regular premiums for these policies or invest the premium amount in some other investment mode??
    Thanks & Regards

  12. Hemant, Thanks for all the info. But why should a consumer pay for the medical and other expenses if he is cheated by the agent of insurance company. Why not companies charge for such deductions from agent only.

  13. Really informative! Advisors will never share this in their own intrest.
    Will a policy holder deemed to be responsible if he overlooks this point & signs a policy doc?

  14. sir, a reliance life insurance policy was sold to my father in january-2014 by a fraud agent (radhika,lives in delhi),through phone call.she assures us to provide a loan of 5 lakhs within 3 months.but now she is not answering our calls.and after enquiring about her ,we found that she is fraud agent.
    also the FREE LOOK PERIOD of my father policy is over.so is there any chance of cancelling my policy and getting full refund .plz explain me about the policy cancellation procedure for those policy whose FREE LOOK PERIOD is over.
    thanks,
    VISHWABANDHU.
    MOB-8506915654

  15. Dear Sir ,

    i was purchase the policy befor 10 days and rceantly i have received policy on my address but i dont know how to canceled in free lokk period and i want to know can i go for direct in office for canceled or not.
    kindy advice for the same, if any time you contact to me my no is 7405223802
    waiting for yor reply

  16. Hi ,

    I need urgent help. I have bought the kotak life insurance policy of 35000 annually for the period of 15 years. Agent insures me that after 3 years you can withdraw the amount and bank will give you anount accrued to 3 years + interest. But when i investigated then i saw surrender amount is very less and nill before three years.

    Yet i have not recieved the policy documents within few days i will get the policy documents.

    Please suggest i want to cancel the policy within the freelook period and want to exit from this policy.

    Please suggest asap its urgent

  17. Hello sir,
    Its important information you shared, but I wanted to know what’s the official period of refunds when a policy is closed with in freelook period and what should a policy holder do if that official period expires or the company is not able to give satisfactory reply for delays.
    Thanks and regards

  18. Hello sir plz help me
    I am the part of fraud by an max life insurance agent. I purchased a policy 13-03-2014 and agent tell me that 1 year plan and the agent put up a fake mobile number in my policy bond and self confirm a company verification call and in 2015 I wanna my refund compny denied the lock in period is 5 year and customer care heared me a recording of my confirmation that policy is 15 years but on the call m not agent put our phone number and verify the call without me. And i am the part of fraud
    Can I get my refund before the completion of 5 year look period in case of fraud?????

  19. Hemant,

    Thanks much for this much-needed post. I have been mis-sold 2 policies instead of the one which I actually wanted. Documents were delivered to my Indian address where as I live in US and had requested for email & never ever got docs in my email in order for me to verify if the policies were of night nature. Now the freelook period is over and I am stuck with those 2 policies. If I file my complaint about the cancellation of policies on the basis of mis selling, Would I be able to get the full refund!

  20. Hi Sir,
    I have purchased a Life insurance policy of Bajaj Allianz last month.I was misinformed about the sum assured(informed 10 times the premium and got 5 times) by the agent.I have applied for free look option mentioning the reasons as misinformation by agent (i have recieved the bond on 7 august and applied on 21 august)and company has declined my request saying that they have delivered it on 29 july .I have no proof to prove either misinformation and date of delivery .What can i do in this case as you have mentioned that “in case a policyholder has suffered from mis selling, limit of 15 days is not applicable”.plz guide
    Thanks and regards
    Karanbir singh kaler

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