Every day, an increasing number of people understand the importance of a health insurance policy in their lives. While India’s life insurance industry is expected to grow by 6.7%, health insurance premiums will rise by 9.7% from 2024-2028.
Finding a good health insurance policy can be a daunting process. Numerous policies are available with varying features, waiting periods, add-ons, etc., which makes it crucial to understand the terms and conditions of your policy carefully before you purchase one.
Although that should be the ideal case, it may not always be followed. Sometimes, the policyholder may overlook some features, and other times, the agent may do the same.
This is why, to make the process of buying a good health insurance policy more transparent, the IRDAI mandated a free-look period for all insurers.
What is a Free Look Period?
Have you ever been shopping on Amazon or Myntra?
Well, if you have, you already know what a free-look period is, albeit under a different name. Let me explain: You buy a shirt from a particular brand on Amazon, thinking that it’s the right size for you. You wait for a day, the shirt gets delivered, and you try it on.
To your surprise, you find out it doesn’t fit you – it’s not the right size.
So what do you do now? You get back on the app and return the item.
Imagine the same thing but for your insurance policy—you purchase a policy, but only after you get the documents do you go through it and realise that it doesn’t fit your medical needs.
This is exactly when a free-look period comes into play.
The free look period is a 15-day window from purchasing the plan, during which you can cancel it and have your premiums returned with almost no penalty. If you, as a policyholder, are not satisfied with the policy in any way – be it the features, terms, etc. – you can request a cancellation from the insurer, return your policy, and get an almost full refund.
The charges they deduct are usually the stamp duty, medical tests cost, and the pro rata premium for the number of days you have been covered. But the premium is not deducted if cancelled within 15 days, and you haven’t made a claim.
Currently, the IRDAI has mandated this period to be 15 days, but they could increase it to 30 days in the future.
Heads Up: It takes an average person up to 5 hours to read & analyze a policy, and 10 hours or more to compare different plans and make a decision.
This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan. Don’t delay this - we have limited slots every day, so book a quick call here before they run out.
Why does a free-look period exist?
Well, it is not that you cannot cancel your policy after the free-look period ends — you can. You can essentially cancel your policy at any time. However, if you do it after your free look period ends:
- It will either be active till the policy tenure is over, and your premiums will not be returned, or
- They may cancel your policy with a heavy penalty.
Apart from this, one of the more important reasons for a free-look period is that insurance agents are incentivised to sell the policy to as many people as possible in most companies.
In such situations, they may miss out on disclosing certain policy aspects. During this free-look period, the policyholder can thoroughly review the policy documents to examine any misleading claims, fallacies, or shortfalls.
What are the Benefits of the Free Look Period in Health Insurance?
Availing of a health insurance plan is a necessity these days, considering the -
- Increased exposure to infections and other medical complications and lifestyle choices
- Boosted medical inflation over surgeries, procedures, OPD charges, physiotherapy, domiciliary procedures, and daycare treatments.
On the flip side, even the best health insurance plans are not a cheap burden. Also, since this plan you will be availing of is the financial safety net during your medical emergencies, purchasing these policies is crucial.
The free look period is crafted for the benefit of the policyholders and is the last chance for a policyholder to ensure that the bought health insurance plan is well-suited for them. Here is a list of some such benefits offered by the free look period -
1. Acknowledging the coverage: Across the free look period, a policyholder can seek clarifications from the insurance provider about the complicated coverage clause. This will guarantee that there are no hurdles during the claim settlement process during claim settlement.
2. No/Minimum premium deductions over policy cancellation: The free look period in health insurance is when policyholders can cancel their plan without substantial financial consequences. The health insurance providers refund the premium amount already paid without major deductions (only if the policy cancellation is made within the pre-decided number of days—15 to 30 days, as mentioned in the policy document).
3. Scope for health insurance policy review: The issue with health insurance policy documents is their medical, legal, and financial jargon that is cumbersome to decipher for any layman. During this free look period, a policyholder has the opportunity and time to dive into the details of your comprehensive coverage plan -
Copayment requirement
Pre- and post-hospitalisation coverage, etc.
4. Opportunity for convenient new plan purchase: In case the plan doesn’t cater to the policyholder’s financial and medical goals, cancelling the plan and availing of another health insurance policy is a much more convenient option during the free look period as compared to further progressing into the plan and then seeking plan portability.
In short, the free look period in health insurance is particularly effective if you want to cancel the plan for a valid reason and without any financial consequences. Now, the question is how to cancel a health insurance plan during the free look period. Here’s the complete protocol -
How do you cancel a policy during the free look period? Here’s a step-by-step guide:
- Gather all the documentation – proof of payment, policy documents, ID proofs, bank details, etc.
- Reach out to your insurer – Submit the documents and a written cancellation request. The cancellation request must contain the policy number, the policyholder’s name, the reason for cancelling the plan, etc.
- Verification – The insurer will verify your request and refund the premium paid in the following days.
Do note that the exact process may vary from insurer to insurer. This is just a broad overview.
Things to keep in mind while availing the free look period:
- Time limit: Please note that the current free-look period for health insurance policies is 15 days from the date of policy issuance.
- Cancellation policy: You cannot cancel the policy by calling your insurer. You should first submit a written request or fill out a form on the insurer’s website to cancel your policy.
- Providing the documentation and other details promptly: If you are cancelling your policy, there are some important details that you need to furnish – the date of receiving the policy, the reason for cancellation, your agent’s details, etc.
In addition, you need to provide your bank details and a cancelled cheque to process the refund and return your original policy document to complete the process.
- ULHP Cancellation: If you wish to cancel a unit-linked health policy (ULHP), the insurer is also entitled to buy back the units at the price as of the policy's surrender date.
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Conclusion
Free look periods give you time to decide whether to keep your insurance policy or cancel it and go for another one. If you cancel your policy within this period, you can receive your premium refunded by reducing a small amount, and you will not have to pay a penalty. You can also cancel your policy after the free-look period ends, which comes with many unnecessary complications and penalties. If you are buying insurance, check out some of the top health insurance policies in 2024. As always, always check with an IRDAI-certified insurance advisor before making the final decision.
