How to return your life insurance policy during free look?

So the agent convinced you that the money-back policy was perfect for you and you bring it home because it guarantees the investment benefits over 15 years. A few days later you discover a tool on the internet that crunches numbers and you share the policy details to understand the rate of return the policy offers. You realise policy returns a sub-inflation rate of 4% and you begin to regret your decision. You don't want this policy, but the agent told you that if you surrender you will not get the premiums back. What do you do? You first check when you got the policy documents. Insurance policies come with a free-look period during which you can return the policy for any reason, and get the premiums refunded. How do you use this facility?

Step 1
Life insurance companies are required to give their customers a time period during which they can reconsider their decision of buying the policy. During this period, if you are dissatisfied, you can return the policy and get your money back. This is the free-look period. It lasts for 15 days from the day you receive the policy documents. For distance marketing modes like online sales, this window is 30 days.

Step 2
You need to write an application form stating the reason for returning the policy. It can be any reason. Even if there is a delay in when the insurance company receives your application, and if you had sent the document within the free-look period, the insurer will consider your request. The insurer may call you to understand your reasons and to resolve the issue, but they cannot force you to stay with the policy

Step 3
The insurance company will deduct the cost for the insurance cover that it had provided to you during the free-look period. These costs include: stamp duty charges for issuing a policy bond and costs of medical check-ups, if any. After deducting these costs from your premium, the insurer will refund the remaining amount from the premium paid. Typically, your money would be refunded within 2 weeks.

In arrangement with HT Syndication | MINT

This article was originally published on December 09, 2016.