If you are buying an insurance policy then you should know about free look period and grace period. This will help you in save your time and money.
Let’s see it how it works
Free Look Period In Insurance Policy
Free look period is a 15/30 days period (30 days if bought online or on phone/sms) in which you can cancel your insurance policy. This starts on the day on which you have received your policy. The onus to prove the date of receipt is on policy holder.
This is applicable for below policies
1. Life Insurance – Endowment, ULIP, Money back , Pension, Child insurance plan and other Traditional life insurance plan
2. Health Insurance Policy with more than 1 year term (No cancellation if you made any claim during free look period)
Free look period is not applicable at the time of renewal of policy.
After receiving your policy read carefully and look for what you were promised and what you get. If you are dissatisfied with your policy then only cancel your policy.
How Can I cancel Insurance Policy in Free Look period
Go to nearest branch of insurance company from which you have bought insurance. Write an application. Give reason why you are canceling policy. Give all other details like when you received policy, your agent details. File insurance cancellation form. This will be on website of insurance company. You have to submit your original insurance policy with premium receipt, self attested photo id proof. Don’t forget to provide your bank details for refund of premium. For this you can give a cancelled Cheque (if your name and acc no is printed on Cheque) or self attested photocopy of your passbooks which contains details of your bank account no.
Link of sample free look cancelation application from SBI Life Insurance
Link of sample policy cancellation form from HDFC life and Max Life Insurance and SBI Life. This may vary from company to company.
If any insurance agent misssold you an insurance policy then free look period will help you getting your money back.
How much is the charge for canceling policy in Free Look period
There are some charges you have to pay to cancel your insurance policy
1. Stamp duty
2. Medical cost for your body checkup
3. Risk premium charge (After issuing you a policy your risk starts for company)
4. In case of ULIP if NAV changes then money based on that value.
These are nominal charge against your premium. So exercise this option if you are not satisfied with your insurance policy.
What if free look period is over
If free look period is over and you still want to cancel your policy then you have to surrender your policy. For this you have to pay heavy fines.
What is Grace Period
This is the extra time you get to pay your insurance premium after due date. If you are paying premium yearly, half yearly or quarterly than grace period for your policy is 1 month. If you are paying premium through monthly mode than grace period for your policy is 15 days (Depend on company to company).
Grace Period for Life Insurance Policy
During the grace period your life insurance policy is fully active. So if anything happen during grace period than insurance company is liable to pay you full claim. Your due premium for the year will be cut from claim.
Grace Period for Health Insurance Policy
There is a grace period for Health Insurance policy but with certain conditions. For Health insurance policy you cant get claim during grace period. You have the facility only for paying premium.
Lets understand with example. Your due date for insurance policy is 31st December. Now you have 1 months grace period till 30 January. If you are taking benefit of grace period and paying premium on 15 January. So period of 1 January to 15 January is not covered under your policy and your cover start from 15 January after premium is paid. You can not make any claim during this period. In case of health insurance don’t wait for grace period because it will cost you your health and money.
So if you are buying an insurance policy then knowing these clauses will benefit you.