The Insurance Regulatory and Development Authority of India (IRDAI) has put forth a proposal to extend the free-look or review period for insurance policies from the current 15 days to 30 days. The free-look period is the duration during which policyholders can review their insurance policies and, if dissatisfied, return them for a refund.
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According to the draft IRDAI (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations 2024, the proposed 30-day free-look period will be applicable to policies obtained through any mode.
Presently, the mandatory free-look period for life insurance policies stands at 15 days, but electronic policies and those sourced through a distance mode already get a 30-day free-look period.
If the draft is finalised, there will be a shift towards issuing most policies in electronic form.
The IRDAI said that policies exceeding sums insured of ₹100 or with single or annual premiums surpassing ₹10 must be issued exclusively in electronic form, regardless of the mode of application.
In addition to the extension of the free-look period, the regulator is also proposing to mandate the collection of policyholders' bank account details at the time of issuance.
This is intended to facilitate electronic transfers of refunds and claim payments.
How does the free-look period work?
The free-look period serves as a safeguard for policyholders who may feel that their insurance policy was misrepresented. During this period, policyholders have the right to cancel their policies and receive a refund.
To cancel a policy during the free-look period, policyholders typically need to submit a written request, including details such as the date of receipt of the policy document, the reason for cancellation, and agent information.
Upon receiving the request, the insurance company may engage with the policyholder to understand the reasons for cancellation and explore potential solutions.
It's crucial for policyholders to carefully review their policy documents as soon as they receive them and take action if they find any discrepancies or if the policy does not meet their expectations.
After the free-look period, cancellation may still be possible through surrender, but additional charges may apply.
(Edited by : C H Unnikrishnan)
First Published: Feb 15, 2024 2:42 PM IST
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