Insurance Free Look Cancellation

I recently posted my costly (but educational) experience about LIC's Jeevan Saral Policy. After having purchased this policy, I realized that this policy is not suitable for my needs.I am now fully convinced that you should buy an insurance policy ONLY to insure your loved ones against the loss of your life. If you buy any other policy that promises to return you money when it is surrendered, STAY AWAY! In short, you should ONLY buy a term-life policy which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. Term insurance SHOULD be used purely for replacing an income of a primary bread-winner in the event of loss of life. Term-life policies typically cost thousands of rupees lesser and offer greater insurance risk coverage than policies marketed as whole life, endowment, money-back, ULIP, permanent life, single insurance premium, and alike.

Coming back to the Indian Insurance Industry, from my own research on the Internet, I have realized that lots of people want to exit their policies, but don't know how to go about it. Fortunately, there is a way out, but only when you realize your mistake within 15 days of having received the bond of your policy. This is called a free look period. Some insurance companies also refers to this as "cooling off" period in their communication.

What is Free Look Period

Basically, you have 15 days from the date of receipt of the policy bond to review the terms and conditions of the policy. If you are not satisfied with the policy or have just realized that you made a mistake, then you can exercise your right to return the policy. The insurance company is expected to refund you the premium paid, after deducting the expenses incurred on their end.

When will the free look period starts?

The free look period starts from the day of receipt of policy documents by the policyholder. So, be sure to collect proof or document the date when you receive those.

How to Cancel your Insurance Policy during the Free Look Period

Step 1: Contact your insurance agent

Contact your insurance agent and tell the person you want to cancel your policy. You most likely will not get any help as the agent's job is to keep you on the policy as long as possible.

Step 2: Contact customer service of the insurance company

You can simply call them or write an email asking about the process on canceling the policy. Usually, they will respond. In my own case, I received response from LIC customer service within days.

Step 3: Contact the branch office where policy was purchased

If you have received the bond and it is still within 15 days limit, you may simply write a formal letter with your signature and date asking them to cancel the policy. You may also be asked to return the bond. At this point, you should make sure you photocopy the bond, the letter, premium receipt, and any documents you are sending to the insurance company. Once you do this, send all the documentation by a registered post so you can claim you sent it within 15 days from the receipt of the bond, if there is any dispute.

Step 4: Contact the regional or zonal or headquarters office of the insurance company

If step 3 doesn't work, then you can also contact their regional office. These offices have customer grievance officers who can listen to your complaints.

Step 5: Contact Insurance Ombudsman at IRDA

I recently came to know about this goverment regulatory agency called IRDA, Insurance Regulation and Development Authority. They were set up in 1998 to regulate the insurance agency also protect customers from malpractices. You can contact insurance ombudsman (or a go-between person in plain English). You will need to find the insurance ombudsman for your area/state from the IRDA website.

Step 6: Grievance Cell at IRDA

Insurance Ombudsman may ask you to lodge a formal complaint with the grievance cell of IRDA. You can lodge your complaint from this page that provides contact information and how to file the complaint on their website.

Policy holder will need to login in to www.igms.irda.gov.in and create a profile for registering a complaint. Policy holders can register one or more complaints. Once the policy holder registers in to IGMS then details of complaint are passed on to respective insurance companies. Policy holder can see the details of the branch offices of the insurance company while registering the complaint. Policy holder receives the confirmation email after registering the complaint along with IRDA token no which will be used by IRDA and Insurance Company for tracking of the complaint through IGMS. A complaint registered through IGMS flows to the insurer’s system as well as the IRDA repository. If the complainant is not satisfied with the resolution provided by Insurer, he/she can escalate the complaint for a review by IRDA for a potential violation of Regulations. All the transactions between the Insurer, Insured and Remarks by IRDA are visible to the complainant.

NOTE:

Please note that, contacting the insurance ombudsman or grievance cell at IRDA (steps 5 & 6) should be your last steps if nothing else worked. You should always first approach the customer care center of insurance company. If you do not receive a response from insurer(s) within a reasonable period of time or are dissatisfied with the response of the company, then you may approach the Grievance Cell of the IRDA.