Here’s the process to cancel an insurance policy and get a refund during the free-look period.
Cancellation allowed for new policies only
Option to cancel life insurance or health insurance The policy is available during the initial few days after the policy is purchased. “The policy can be canceled anytime within 15 days and 30 days in case of electronic policies and policies received through distance mode,” says Indranil Chatterjee, co-founder, Renewbuy, an insurance brokerage firm.
You can use the free-look period to get more clarity about the new insurance policy you have just purchased. “During the free look period, the insured is at liberty to continue to ask questions to the insurer if the insurer is unclear about the benefits or wants a better understanding of the policy,” says Chatterjee.
If you obtain the required clarity and are satisfied, you may continue otherwise you may exercise the option to cancel during this period. “During this time period, policyholders have the right to re-evaluate the plan and cancel it if they are unhappy with the plan for any reason. Can cancel or refund it for a refund of the premium paid, subject to certain deductions, says Vivek Narayan, co-founder and promoter of health insurance brokerage firm Sana Health Solutions.
When the Freelook Option Doesn’t Work
There are some scenarios where the free-look option may not work. “NS freelook period Applicable only if the policy is issued afresh as freelook period is not available during policy renewal. Also, insurance companies provide free look facility only if the policyholder has not made any claims during the first 15-30 days of the policy,” says Naval Goel, Founder & CEO, PolicyX.com an insurance web aggregator .
How To Cancel Policy: Online Vs Offline
The free-look period varies from insurer to insurer, so check your policy documents to find out the free-look period of your particular policy. The cancellation process can be done either online or offline.
“Cancellation and refund can be applied online or offline. In the online process, the policyholder can send an email to the customer care ID provided by the insurance company and the request will be taken from there. For offline route, the policyholder can apply for cancellation. You can visit the branch of the insurance company to request for the same,” says Goyal.
For online cancellation You have to fill the form online by visiting the website of the insurer. You can also start the process by sending an email to customer service if your insurance company allows (you can visit their website or ask customer service).
To cancel the policy offline, one can do so through his advisor or visit the nearest insurance company branch. Cancellation request has to be submitted in written format. “The written document can also be submitted by downloading the online form from the official website of the insurer or can be obtained through the customer care number. Regarding the starting date of the policy for the insurer to initiate the change or cancellation of the policy. It is also very important to be informed during the free look period,” says Chatterjee.
The cancellation process takes some inquiries during the free-look period so that the insurance company can make a last-ditch effort to address your complaints or obtain detailed customer feedback. “Once the policyholder notifies the request cancellation of policy During the free look period, the health insurance service or life insurance service provider asks for the reason for cancellation, contract related to the policy, and other required documents,” says Goyal.
There are certain documents you need to provide while applying for cancellation of your policy. “The insured has to submit a written document to the insurer which needs to be furnished with the information- date on which the policy document was received, information of the insurance advisor who helped in purchasing the policy, reason for cancellation, bank account details, refund for,” Chatterjee says.
Bear in mind that while you may have an advisor or broker to assist you during the free-look period, you can deal directly with the insurance company to ensure a quick return. Says Narayan, “It is advisable to apply directly to the insurance company for cancellation of the policy, as the time frame is limited (at least 15 days after receipt of the policy copy).”
What is returned to the policyholder?
Once the refund application process is completed and approved by the insurer, the refund premium is calculated by deducting certain elements. “The insurer can deduct a proportionate amount of premium for the risk covered for the number of days the policy is in force. If the cashless medical examination was conducted at the time of application, the insurer can deduct the cost incurred for the same Trial and refund the balance. Stamp duty charges (as applicable) can also be deducted from the refundable amount,” says Narayan.
When it comes to Unit-Linked Insurance Plans (ULIPs) the net return amount will depend on the market conditions. “In case of unit-linked insurance policies, the allotted units will be repurchased by the insurer at the net asset value on the day of your policy cancellation,” says Goyal. Therefore, if the market has gone up during this period you may get an additional amount and if the opposite happens you may end up with a lower refund amount.
How long will it take you to get the refund?
The time taken to receive a refund may depend on the mode of application – online applications can be quicker. “Both a health insurance plan and a life insurance plan may take 7-10 working days. However, in case of any challenge, the period may extend slightly,” says Goyal.