Cancellation of a life insurance policy: how to cancel a life insurance policy during the free consultation period and get a refund

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After buying a life insurance policy, what if you realize it’s not the right coverage for your needs? If you end up with the wrong insurance policy, you can use the free consultation period offered on life insurance policies to cancel your policy and get your money back.

Here is the process 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 days after the policy is taken out. “The policy can be canceled at any time within 15 days and 30 days in case of electronic policies and policies purchased remotely,” says Indraneel Chatterjee, co-founder of RenewBuy, an insurance brokerage firm.

You can use the free consultation period to get more clarity about the new insurance policy you have just taken out. “During the free consultation period, the insured has the freedom to continue to ask questions of the insurer, in case the insurer is unclear about the mentions of benefits or wishes a better understanding of the policy. “, explains Chatterjee.

If you get the required clarity and you are satisfied, you can continue, otherwise you can exercise the cancellation option during this period. “During this period, policyholders have the option to reassess the plan and cancel it if they are unhappy with the plan for any reason. If the terms and conditions stipulated in the plan do not meet the expectations of the insured, the insured can cancel it or return it for refund of the premium paid, subject to certain deductions,” says 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 search option may not work. “The freelook period is only applicable if the policy is just issued because the freelook period is not available when renewing the policy. Also, insurance companies only provide freelook facility when the policyholder has made no claims in the first 15-30 days of the policy,” says Naval Goel, Founder and CEO of PolicyX.com, an insurance web aggregator.

How to cancel the policy: online or offline

The free examination period varies from insurer to insurer, so check your policy documents to find out how long the free examination lasts for your particular policy. The cancellation process can be done online or offline.

“Cancellation and refund can be requested 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 charge from there. For the offline route, the insured can go to the branch of the insurance company to file the cancellation request,” says Goel.

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 start the process by emailing customer service.

To cancel the policy offline, one can do so through his adviser or go to the branch of the nearest insurance company. A cancellation request must be submitted in writing. “The written document can also be submitted by uploading the online form on the official website of the insurer or through the customer service number. It is also very important for the insurer to inform about the start date of the policy , to initiate cancellation or modification of the policy during the free consultation period,” says Chatterjee.

The cancellation process during the free review period involves questions so the insurance company can make a final attempt to address your grievances or obtain detailed customer feedback. “After the policyholder communicates the request for cancellation of the policy during the free consultation period, the health insurance service or the life insurance service provider asks the reason for the cancellation, the policy contract and other required documents,” says Goel.

You will need to provide certain documents when requesting cancellation of 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 underwriting the policy, the reason cancellation, bank details for refund,” says 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 since the deadline is limited (minimum 15 days after receipt of the copy of the policy)”, explains Narain.

What is reimbursed to the insured?

Once the reimbursement request process has been completed and approved by the insurer, the reimbursement premium is calculated after deducting certain elements. “The insurer may deduct a premium amount pro rata to the risk covered for the number of days the policy was in force. In the event that a cashless medical examination was carried out at the time of application, the insurer could reduce the cost incurred for the tests and refund the balance. Stamp duty charges (if any) can also be subtracted from the refundable amount,” says Narain.

For unit-linked insurance schemes (ULIP), the net amount of reimbursement will depend on market conditions. “In the case of unit-linked insurance policies, the awarded units will be redeemed by the insurer at net asset value on the day your policy is terminated,” says Goel. So, if the market has gone up during this period, you may get an additional amount and if the opposite happens, you may end up with a lower refund amount.

How long will it take you to get the refund?

The time it takes to get the refund may depend on the mode of application – applying online may be faster. “It can take 7-10 working days for health insurance plan and life insurance plan. However, the duration can increase a bit if there is a challenge,” says Goel.

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