After purchasing a life insurance policy what if you realise that it is not the right cover for your needs? If you end up with the wrong insurance policy, then you can utilise the free-look period offered on life insurance policies to cancel your policy and get the refund. Here is the process of how to cancel an insurance policy during the free-look period and get a refund. Cancellation allowed only for new policiesThe option to cancel a life insurance or health insurance policy is available during the initial few days after the policy has been bought. "The policy can be cancelled anytime within 15 days and 30 days in case of electronic policies and policies sourced through distance mode," says Indraneel Chatterjee, Co-Founder, RenewBuy, an insurance brokerage firm.You can use the free-look period to get more clarity regarding the new insurance policy you have just purchased. "During the free look period, the insured has the liberty to continue asking questions to the insurer, in case the former is not clear on the benefits mentions or want a better understanding of the policy," says Chatterjee.If you get the required clarity and are satisfied, then you may continue else you can exercise the cancellation option during this period. "During this time period, policyholders have the leeway of re-assessing the plan and cancelling it if they are unhappy with the plan for any reason. If the terms and conditions stipulated in the plan do not meet the policyholder's expectations, he/she can cancel or return it for refund of premium paid, subject to certain deductions," says Vivek Narain, Co-founder & Promoter, SANA Health Solutions, a health insurance brokerage firm.When the freelook option doesn't workThere are certain scenarios where the free-look option may not work. "The freelook period is only applicable if the policy is freshly issued as the freelook period is not available during policy renewal. Also, the insurance companies provide a freelook facility only when the policyholder hasn't made any claim during the 1st 15-30 days of the policy," says Naval Goel, Founder & CEO, PolicyX.com an insurance web aggregator.How to cancel the policy: Online vs offlineThe free-look period varies from insurer to insurer, so do check your policy documents to find out the duration of the free-look of your particular policy. The cancellation process can be done either online or offline. "The cancellation and refund can be applied for either online or offline. In the online process, a policyholder can send an email to the customer care id given by the insurance company and the request will taken up from there. For the offline route, the policyholder can visit the branch of the insurance company to put in the request for the cancellation," says Goel.For online cancellation you will need to visit the insurer's website and fill the form online. If your insurance company allows (you can check their website or ask the customer service) you may also initiate the process by sending an email to customer service.To cancel the policy offline, one can do it through their advisor or visit the nearest insurance company branch. A cancellation request will need to be submitted in written format. "The written document can also be submitted by downloading online form from the insurer's official website or availed through the customer care number. It is also very important for the insurer to inform about the starting date of the policy, to initiate the policy cancelation or alteration during the free look period," says Chatterjee.The process of cancellation during the free-look period entails some questioning so that the insurance company can make a last attempt to address your grievances or get a detailed customer feedback. "Once the policyholder intimates the request for policy cancellation during the Free Look Period, the health insurance service or life insurance service provider asks for the reason for cancellation, policy-related contract, and other requisite documentation," says Goel.You will need to provide certain documents while applying for cancellation of your policy. "The insured must submit a written document to the insurer which needs to be furnished with information like- the date on which the policy document was received, information of the insurance advisor who helped in buying the policy, the reason for cancelation, bank account details for refund," says Chatterjee.Do keep in mind that though you may have an advisor or broker to help you during the free-look period, to ensure quick refund you can deal directly with the insurance company. "It is advisable to apply for cancellation of policy directly with the insurance company since the time period is limited (minimum 15 days post receipt of policy copy)," says Narain.What is refunded to the policyholder?Once the refund application process is completed and approved by the insurer, the refund premium is calculated after deducting certain elements. "The insurer may deduct a pro-rata amount of premium towards risk covered for the number of days that the policy was in force. In case a cashless medical test was conducted at the time of application, the insurer could reduce the cost incurred for the tests and refund the balance. Stamp Duty charges (as applicable) may also be subtracted from the refundable amount," says Narain.When it comes to unit-linked insurance plans (ULIPs) the net refund amount will depend upon market conditions. "In the case of unit-linked insurance policies, the units allotted will be repurchased by the insurer at the net asset value on the day your policy gets canceled," says Goel. So, if the market has gone up during this period you may get additional amount and if the opposite happens you may end up with a lower refund amount.How long will it take for you to get the refund?The time taken to get the refund may depend upon the mode of application -- online application can be quicker. "It may take 7-10 working days for both health insurance plan and life insurance plan. However, the duration may increase a little in case of any challenge," says Goel.
from Economic Times https://ift.tt/3jMQwIb
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