Free-look period with Insurance policies

-


Regret buying that expensive insurance policy? . There is hope of getting back back your money if you act soon enough . Often investors end up buying insurance products from hard selling agents without being sure of product payoffs . After you purchase the product you may realize that the insurance cover is inadequate , or that a large part of your premium has gone towards advisor fee , or that the policy document contains certain exclusions or conditions that you had not been informed of earlier.
Fortunately there is an option to take an exit from these products . We are referring here to the 15 day FREE – LOOK in period that the IRDA has made mandatory for all life insurance products. The Free Look in Period a period starting from the date of receipt of policy document ,in which the insurance company agrees to pay back your premiums without charging the investor any mortality charges . Up to the end of this period, you are free to re-think and reverse your insurance purchase decision, by returning your policy to the insurance company and asking for your premium to be returned to you. Health insurance policies that cover you for more than three years also have a similar mandatory look in period . Many medical insurance products , specially the new varieties that are unit linked also offer a similar facility
Important details of your policy is available not in the fancy insurance product brochures , but in the 'policy document' that arrives in about a week after you have made your application .Unfortunately most of us miss reading this important document that gives the best insight into product features .
The Policy Document basically lists the terms of insurance contract
Coverage Amount, Terms and Conditions under which claims can be made
Investment Details if any
Policy riders
Obligations of the insurance company
Specific Exclusions and their time frames
Expenses related to the policy .This can be easily deducted from ULIP products ,but not so for others.
Nominee Details
Compare these features with what has been sold to you by your insurance agent . If you feel that you have been sold a product that is not suitable, you can return the policy during this look in period .
Just one caveat – The insurance company can deduct certain expenses incurred at the time of issuing the policy to you . For example franking expenses , any medical test paid by insurance company etc can be deducted from your premium before paying you back. In the case of medical insurance , if a free look is available then they may deduct proportional cost of cover . However these costs should not deter you from canceling your insurance contract as they will be a very small portion of your insurance premium . Besides you will be saving yourself from investing in a undesirable product .
Having decided that the policy is not what you want, call the customer service department of the insurance company and understand the cancellation process from them. Usually cancellation form will be available online and can be sent by courier to the operations/customer service department. Alternatively, you can also go the local branch of the insurance company . You need to act immediately on receipt of the policy document so that you do not loose precious time as cancellation has to be done within 15 days from the receipt of the policy.

Comments

Post a Comment

Popular posts from this blog

Assessing Tax impact while choosing investments

-
Assessing Tax impact while choosing investment vehicles My client, a media professional, had a desire to own his own stocks and when he received an inheritance , he immediately opened an account a   Portfolio Management Scheme . As luck had it , markets rallied and the PMS delivered spectacular returns . All was well till it was time to file the year’s   ITR. His annual taxable income was 48 lakhs and a long term capital gains of 6   lakhs had been booked in the month of Dec 2022 . At a 10 % long term capital gain tax , with   one lakh exemption , my client was happy that the extra   tax liability was only Rs.50,000 . To his surprise his CA asked him to deposit 1.77 lakhs extra in taxes . How did the tax amount jump up from Rs.50,000 to 2.23 lakhs ?. The tax payable was more than four times the amount anticipated by my client. The culprit was   the capital gain that took his total income above 50 lakhs , a slab that attracts a 10 % surcharge on total ta...
Read more

Debt Alternatives

-
  As India moves towards becoming a 5 trillion-dollar economy, investors have much to gain by participating in this big growth decade via equities. But equities are essentially long gestation investments and come with their fair share of volatility. For investors looking at fixed income to park short term funds or wanting higher returns while diversifying from equities, traditional fixed income instruments and mutual funds offer limited options. On one hand there is  demand for products with higher returns in the fixed income space. On the other hand, is a growing requirement of funds by business owners and individuals for purposes that aren’t traditionally covered by banks or NBFCs. For example, Corporates both in traditional and new age business require high quality and different types of capital when they go through special situations like liquidity crunch, bankruptcy, promotor buy backs etc. Similarly on the retail side, our young consuming population needs quick and e...
Read more
-
    Factor Investing: An introduction   Factor investing, is an asset pricing and portfolio construction approach that involves targeting specific drivers of returns. There are five main factors associated with higher returns that are widely used in factor ETF strategies: value, small-caps, momentum, low volatility and quality (which is also known as dividend payers). A sixth factor, yield, is sometimes included in the main factor definition count. For the purpose of our writeup today, we will be focussing exclusively on factor-based ETFs with some compelling statistics that should help you as an investor to: - Critically evaluate performance of large cap investments in managed funds - Usher in ETFs as a cost effective and promising part of your core portfolio We will also restrict this analysis of funds to the large cap space. It is likely that in a few years midcap and small cap indexes will start outperforming their managed peers, but so far data points t...
Read more