How many days can the insured return the policy for a full premium refund?

Most people are aware that life policies come with a free-look period. This means that from the time you receive your document, you get at least 15 days to review it, and if you are unhappy, to return it to the insurer. The insurer can’t force the policy on you. The same applies for health insurance policies too, so it’s important to understand your policy as soon as you get the documents.

All kinds of health insurance policies—indemnity cover that pays for hospitalisation, defined benefit plans like critical illness policies and personal accident covers with tenors of at least a year—come with a free-look period of 15 days. This free-look window kicks in from the time you receive the policy documents, and some insurance companies may also extend this window to 30 days from the date of dispatch.

If you wish to return the policy, the insurer will refund the premiums paid after deducting stamp duty charges, proportionate charges for insurance for that period and costs for any medical check-ups.

In the case of annual health insurance contracts, insurers are supposed to pay at least 50% of the cost of medical check-ups that you may have to undergo at the time of buying a policy. This happens as the insurer needs to be sure about your health; some may even decide to pay the entire amount. However, if the insurer rejects the policy, the entire cost get shifted to the policyholder.

Also read: Health insurance portability: Here’s how to go about it

You need to know that your health insurance policy is active when you receive the policy documents. However, most insurance companies will not pay a claim arising out of sickness in the first month. This is called the initial waiting period. But accidents are insured, so if you make a claim on account of an accident and the insurer pays the money, you are not entitled to a refund if you choose to return the policy.

Here is a step-by-step guide on how to return the policy.

1. Go through the policy documents carefully as soon as you receive them

2. Call the customer care, send an email, approach your agent or write a letter to the insurer to initiate a free-look policy return. A call, email or visiting the insurer will be faster.

3.The insurance company will send an endorsement and refund the money within 7 days.

4.Remember, you can only cancel the policy during the free-look and not port it. Porting a policy is possible only at the time of renewal.

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The free look period is a window of time that lets you review a life insurance policy after you’ve received it to make sure the coverage is right for you. During the free look period, you can cancel the policy and get a refund for any premiums you’ve paid.

Key Takeaways

• The free look period for life insurance provides a window of time when you can cancel your policy for any reason. 
• The free look period gives you at least 10 days to review the policy and figure out whether the coverage meets your needs.
• The free look period begins the day that you receive the policy documents and/or make your first payment.
• You won’t pay any financial penalties, such as surrender charges, if you cancel your policy during the free look period.

How Do Free Look Periods Work for Life Insurance?

A free look period for life insurance is like a return policy for, say, an appliance or a pair of shoes. It’s designed to protect you in case you want to “return” a life insurance policy for any reason, within a certain amount of time. If you cancel a policy within the allowable free look period, your insurer should refund any premiums you’ve paid without making you pay a surrender charge.

The clock on a free look period starts once you receive your policy. The period normally lasts at least 10 days but could be as long as 30 days, depending on the state laws where you live.

For instance, Texas law requires the free look period to be at least 10 to 20 days. In New York, the period must be 10-30 days. A 30-day period is required in New York for any policy offered by mail.

Note

Free look periods affect term, whole, and variable life insurance policies.

Keep in mind that the free look period for a new life insurance policy might be shorter than it is for a replacement life insurance policy. For instance, a North Carolina policyholder has a minimum 10-day free look period for new coverage and a minimum 20-day free look period for replacement coverage.

An Example of a Free Look Period for Insurance

Let’s say Rasha purchases a $500,000 life insurance policy and then reads through the policy after she receives it. The payments are somewhat high, so she checks in with her financial advisor about whether the policy is a good use of her money.

After the meeting, Rasha realizes she’d rather invest the money that she planned to use for monthly insurance premiums. She’s within her free look period, so Rasha asks her insurance company to cancel her policy and refund any premiums she’s paid

Note

Once you receive a life insurance policy, look it over as soon as possible. You might also want an attorney, trusted relative, financial advisor, or tax accountant to review it before the free look period ends.

Free Look Period vs. Grace Period for Life Insurance

Typically, life insurance policies have a free look period as well as a grace period.

The free look period refers to the window of time when you can cancel an insurance policy for any reason and receive a refund of your premiums paid. The grace period refers to a period of time after your premium due date when you can make a late payment without losing your coverage. Most states make insurance companies give you a grace period of around one month.

 Free Look Period  Grace PeriodAllows you to cancel a policy for any reason and receive a full refundLets you make a late payment and keep your coverageUsually lasts 10 to 30 daysNormally lasts around one monthApplies to premiums paid before and during free look periodApplies to premium payments due that payment period 

Frequently Asked Questions (FAQs)

How long is the free look period for a life insurance policy?

Typically, free look periods lasts at least 10 days, and some last as long as 30 days, depending on which state you’re in.

How do I cancel my policy during my free look period?

To cancel your policy during the free look period, contact your insurer or the financial representative who helped you purchase your policy and let them know you want to cancel.

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Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

1. Texas Department of Insurance. “Life Insurance Guide.”

2. New York State Department of Financial Services. “Life Insurance.”

3. North Carolina Department of Insurance. “FAQs About Life Insurance,” Click on “What does “free look” mean?”

   How many days must the insurer refund all premiums and policy fees?

   Refund any premiums and policy fees within 30 days of notice if the policy is within the cancelation period specified by the insurer. Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase a new insurance?

   When full premium is returned to the insured it is called?

   There are several types of policies but one that isn't talked about very often is called return of premium life insurance. With this type of coverage, which has a higher premium cost than term life insurance, you can get your premiums* returned to you if the policy period ends and the insured person is still living.

   When can premium be refunded?

   The law allows the policyholder to have 15 days as the free-look period from the date the policy document is received. During this duration, the policyholder is entitled to cancel the policy and get a refund.

   Can insurance premium be refunded?

   Refunds are only provided in case the policyholder cancels their vehicle insurance policy. The refund amount will depend on the coverage tenure remaining under the policy. Do note that refund is only possible there have been no claims made during the policy period.