How to Cancel Your Life Insurance Policy Within Free-Look Period?
Published On Apr 07, 2021 12:00 AM By InsuranceDekho
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The decision to cancel a life insurance policy can be based on a variety of reasons. Policyholders can cancel their life insurance policies by simply contacting their insurer or stopping their payments altogether. It depends on the type of policy, the start date, and the terms and conditions associated with the policy to know the impact of cancelling it. Cancelling term life insurance is fairly easy, but whole life insurance carries cancellation fees.
There is a 15-day free-look period after the receipt of a life insurance policy. During this period, policyholders who wish to cancel the policy can get a refund of the premiums.
Steps To Cancel Policy During Free Look Period
In the event of any regrets after adopting a life insurance policy, it is possible to cancel it and avail refund of the premium. The free look period is generally 15 days and the process of cancellation is as follows:
1. Send the Requisition to Cancel the Policy
If the policyholder feels that it is not a suitable option for them, they must fill out a cancellation request form. For the convenience of their customers, many insurers allow users to submit the cancellation form online. The duly filled-out form should, however, be submitted in hardcopy at the nearest office of the insurance company. This form has to be filled with all the necessary information such as:
1. The details of the policy
2. The date at which the policy papers were received
3. The details of the insurance agent
4. The reasons for discontinuing the policy.
2. Response From the Company for Requisition
In the event that the insurance agency receives a request for cancellation from the policyholder, they will contact the insurer and attempt to resolve the issues which led the policyholder to request cancellation. The company will proceed with the cancellation procedure and refund process if the policyholder remains stable in his decision despite all the efforts.
3. Refund of Premium
After processing the cancellation application, the company will transfer the refund amount directly to the bank account of the policyholder or settle the amount in the form of a cheque. A complete refund is not possible as the following deductions will be made in the refund amount.
1. Proportionate risk premium
2. Stamp duty costs
3. Costs incurred by the insurer on the medical check-up- if any
You have to notify the insurer of your decision, either by contacting their customer service department or by visiting their office. A cancellation through your agent might not be a good idea. Ensure that you note down the date that you received the policy document and be very careful not to sign a backdated receipt, since the free look period begins on the date you received the policy document.
Read More: How Much Life Insurance Do I Need?