Do you know How to Cancel a Life Insurance Policy during Free-Look Period? Let’s gather some information on this simple yet useful topic.
A life insurance policy ensures to pay to the beneficiary in case of death of the policyholder. In return to this, the insured pays regular premiums. Moreover, if the policyholder outlives the policy term, then also maturity benefits are given to him/her.
Since there are many life insurance policies available online, one may get confused in selecting the most preferred plan. During this dilemma, if one has purchased a life insurance plan that he/she does not find worth buying after purchase, he/she can cancel it and get the refund. However, the cancellation and refund are allowed only within the free-look period.
What is Free Look Period of a Life Insurance Policy?
As per insurance laws, every life insurance company is required to provide a time period to its customers during which the customer can cancel his/her purchased insurance policy and get the refund. This time period is known as the free-look period and it lasts for 15 days from the date of policy receiving documents.
However, for distant marketing cases such as online sales, this time period is 30 days. So, during the free-look period if one feels dissatisfied with his/her purchased life insurance policy, then he/she can return it during this time period and get his/her money back.
How to Cancel a Life Insurance Policy during Free-Look Period?
The steps to cancel a life insurance policy during its free-look period are:
1. Send the Cancellation Request:
For cancelling the policy during free-look period, a policyholder has to send a written application to the insurance provider wherein he/she must mention the reason for returning the plan clearly. This means the communication for policy cancellation must be in writing.
There are some insurance companies that provide cancellation form for a policy that is to be cancelled during the free-look period. In this case, one should fill this form and send it to the insurance provider.
However, in the application for cancellation, details of the policy, policy documents receiving date, and details of the agent (if there) must be clearly mentioned. The insurance providers consider the application that is sent within the free-look period of the life insurance policy even if there is a delay in receiving the documents by the company.
Most of the insurance providers call the insured in this case to understand the reason and solve the issue. However, they cannot force any person to stay with the plan.
2. The Process of Cancellation:
Once the insurance provider receives the request for cancellation, it will get in touch with the insured. This is done to completely understand the reason for cancellation and try to give the solution.
However, if an individual still wishes to cancel the policy, then the insurance company should process the request for cancellation and give a refund.
3. The Refund:
As soon as the application process of cancellation is completed and gets approved, the refund process starts. Here, the premium of the refund is calculated after the deduction of the following:
- The pro-rated premium for risk for the coverage period
- Charges of stamp duty
- Expenses of the medical examination, if any, incurred through the insurance provider.
So, the remaining amount is refunded mostly within two weeks.
Important Points to Note:
Few points that should be noted by the policyholder are:
- It is policyholder’s responsibility to cross check the policy documents receiving date.
- In the situation of online sale of the plan, the free-look period gets extended from 15 days to 30 days.
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To Sum it Up!
Life insurance policy is one of the best gifts that one can give to his/her family. However, the availability of many plans in this category may confuse one. In such situations, if one finds a purchased policy irrelevant for him/her, then he/she can easily cancel it by the above mentioned simple steps.
However, the cancellation and refund are possible only when one cancels a plan within the free look up period. So, keeping the tenure of the free-look period in mind is very important for such cases.
Author Bio: This is a guest post by by Ajeet @ FinanceGab who writes about finance, insurance, investment & related topics.