Free-Look Period
A window after policy issuance in which you can cancel and get a refund of premium.
IRDAI mandates a free-look window of at least 15 days (30 days for distance-marketed policies) from receipt of documents. The insurer may deduct stamp duty, medical costs and pro-rata risk premium.
Why Free-Look Period matters when comparing products
The free-look period offers a crucial opportunity to review policy terms and conditions thoroughly after purchase, ensuring it aligns with one's needs. If any discrepancies or unsuitable clauses are found, this window allows cancellation and a refund, reducing the risk of being locked into an inappropriate long-term financial commitment. This flexibility is vital when comparing and selecting insurance products in India.
Illustrative example
Suppose someone buys a life insurance policy with an annual premium of ₹20,000. Within the 15-day free-look period, they realise it doesn't meet their requirements. Upon cancellation, the insurer might deduct ₹200 for stamp duty, ₹500 for medical examination, and ₹100 for risk cover for the few days. The remaining ₹19,200 would be refunded to the policyholder.