The Insurance Regulatory and Development Authority of India (IRDAI) is considering extending the free-look period for insurance policies from the current 15 days to 30 days.
The free-look period allows policyholders to cancel their policy within a specified timeframe if they find it unsuitable.
If approved, this extension could provide customers with more time to assess their insurance coverage and make informed decisions.
Safeguarding Policyholders’ Interests: The Purpose of the Free-Look Period
The free-look period serves as a protective measure for policyholders, offering them an opportunity to review their policy terms and conditions.
Often, discrepancies between the information provided by agents and the policy document lead to customer dissatisfaction.
By extending the free-look period, IRDAI aims to empower policyholders and prevent instances of mis-selling.
Refund Policy: What Happens When a Policy is Returned
In the event of policy cancellation during the free-look period, insurance companies refund the premium amount to the policyholder.
However, deductions are made for the risk premium for the duration of coverage and other expenses such as medical check-ups and stamp duty.
Additionally, IRDAI’s draft regulation emphasizes the mandatory requirement of nomination for life insurance policies, ensuring greater clarity and protection for policyholders.
Embracing Digitalization: Shift Towards Electronic Policy Issuance
IRDAI’s proposed regulation also mandates the issuance of policies in electronic form for sums assured exceeding Rs 100 or single/annual premiums over Rs 10.
This move towards digitalization aims to streamline policy issuance processes and enhance accessibility for policyholders, irrespective of whether applications are submitted digitally or offline.
