Here’s how to cancel an insurance policy during the free consultation period and get a refund.
Cancellation allowed only for new policies
The option to terminate a life or health insurance policy is available during the first few days after the policy is purchased. âThe policy can be terminated at any time within 15 days and 30 days for electronic policies and policies purchased through remote mode,â said Indraneel Chatterjee, co-founder of RenewBuy, an insurance brokerage firm.
You can take advantage of the free consultation period to obtain more details on the new insurance policy you have just taken out. “During the free consultation period, the insured is free to continue asking questions to the insurer, in case the latter is not clear on the mentions of benefits or wishes a better understanding of the policy” , explains Chatterjee.
If you get the required clarity and are satisfied, you can continue, otherwise you can exercise the option to cancel during this period. During this period, policyholders have the option to re-evaluate the plan and cancel it if they are not satisfied with the plan for any reason. If the terms and conditions stipulated in the plan do not meet the expectations of the insured, he can cancel it or return it for reimbursement of the premium paid, subject to certain deductions, âsays Vivek Narain, co-founder and promoter, SANA Health Solutions, a health insurance brokerage firm.
When the freelook option does not work
There are certain scenarios where the free appearance option may not work. “The freelook period is only applicable if the policy is freshly issued because the freelook period is not available when renewing the policy. In addition, insurance companies provide a freelook facility only when the policyholder insurance made no claims in the first 15 to 30 days of the policy, âsays Naval Goel, founder and CEO of PolicyX.com, a web insurance aggregator.
How to cancel the policy: online vs offline
The clear appearance period varies from insurer to insurer, so check your policy documents to find out how long your particular policy has clear appearance. The cancellation process can be done online or offline.
âCancellation and refund can be applied online or offline. In the online process, an insured can send an email to the customer service id provided by the insurance company and the request will be taken into account. charge from there. For the offline route, the policyholder can go to the branch of the insurance company to file the cancellation request, âGoel explains.
For an online cancellation, you will need to visit the insurer’s website and complete the online form. If your insurance company allows it (you can check their website or ask customer service), you can also initiate the process by sending an email to customer service.
To cancel the policy offline, you can do so through your advisor or visit the branch of the nearest insurance company. A cancellation request must be submitted in writing. “The written document can also be submitted by downloading the online form from the official website of the insurer or used through the customer service number. It is also very important for the insurer to inform the start date of the policy, to initiate the cancellation or modification of the policy during the free consultation period, âsays Chatterjee.
The cancellation process during the free review period involves some questioning so that the insurance company can make a final attempt to address your grievances or obtain detailed customer feedback. “Once the policyholder informs the request for cancellation of the policy during the free consultation period, the health insurance service or the life insurance service provider asks for the reason for the cancellation, the contract related to the police and other required documents, âGoel explains.
You will need to provide certain documents when you request to cancel your policy. “The insured must submit a written document to the insurer which must be provided with information such as the date the policy document was received, the information of the insurance advisor who assisted in purchasing the policy, the reason of the cancellation, bank details for a refund, âsays Chatterjee.
Keep in mind that while you may have an advisor or broker to help you during the free consultation period, to ensure prompt reimbursement, you can deal directly with the insurance company. “It is advisable to request the cancellation of the policy directly from the insurance company because the time limit is limited (at least 15 days after receipt of the copy of the policy)”, explains Narain.
What is reimbursed to the policyholder?
Once the reimbursement request process is completed and approved by the insurer, the reimbursement premium is calculated after deducting certain items. âThe insurer may deduct a premium amount in proportion to the risk covered for the number of days the policy was in force. In the event that a cashless medical test was performed at the time of the request, the insurer could reduce the cost incurred for the tests and reimburse the balance. Stamp charges (if applicable) can also be subtracted from the refundable amount, âNarain explains.
For unit-linked insurance plans (ULIP), the net amount of reimbursement will depend on market conditions. âIn the case of unit-linked insurance contracts, the allocated units will be bought back by the insurer at the net asset value on the day of termination of your contract,â says Goel. So, if the market has gone up during this time, you may get an extra amount and if the opposite happens then you may end up with a lower payback amount.
How long will it take you to get the refund?
The time it takes to get the refund may depend on the method of claiming – online claiming may be faster. âIt can take 7-10 business days for both the health insurance plan and the life insurance plan. However, the duration can increase a bit if something goes wrong,â Goel explains.