Irdai proposes to extend the Free Look Period for insurance policies by 30 days

To empower policyholders and ensure greater transparency, the Insurance Regulatory and Development Authority of India (Irdai) has proposed extending the free look period for insurance policies obtained through any mode.

Previously set at 15 days from the date of receipt of the policy document, this crucial window now spans an additional 30 days. This extension will help policyholders with an increased duration to thoroughly review their insurance policy details, understand its terms and conditions, and make informed decisions regarding its suitability.

When you buy an insurance policy, you get a free look-up period to cancel your insurance policy without incurring surrender charges. Additionally, if you return the policy within this timeframe, the insurance company will refund your initial premium payment.

Siddharth Singhal, Business Head – Health Insurance, Policybazaar.com, said, “The increase in the freelook period will be a positive move towards ensuring customer satisfaction and protection. The freelook period allows customers to review their insurance policy and cancel it within a specified timeframe if they are unsatisfied with the terms and conditions. Extending the free look period from 15 days to 30 days will provide customers ample time to research and understand the policy they have purchased. This step is taken to preserve the interest of the customer and ensure that they are fully aware of the coverage and benefits provided by the insurance policy."

The free look cancellation period typically spans up to 15 days from the policy issuance. The Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024, in its draft exposure, has proposed to increase it for up to 30 days.

“The free look period for the policies, obtained through any mode, shall be 30 days from the date of receipt of the policy document,” per the exposure draft.

Sanjiv Bajaj, Jt. CHairman & MD, BajajCapital Ltd., said, "From an industry perspective, the initiative underscores a commitment to transparency, which could lead to a reduction in associated compliance costs. Moreover, by building stronger relationships with customers based on trust and empowerment, insurers may witness increased renewal rates and greater brand loyalty, consequently enhancing the overall reputation of the industry and attracting new customers. This collaborative approach contributes to the development of a resilient insurance ecosystem where consumers feel empowered and the industry operates with transparency, resulting in mutual benefits for all stakeholders."

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Sometimes, in the rush of buying policy, especially around FY end, customers tend to believe what’s being said and the basis that finalises the buying decision. The nitty gritty around specifics is only known once the policy document is received, and given the complexity of certain products, it takes a longer time to review and understand the finer details.

Apaar Kasliwal, Executive Director at PolicyBoss.com, says, "We are confident that extending the free look period to 30 days will allow ample time for policyholders to be thorough in their understanding given the pace of innovation in insurance products nowadays."

“Along with the 30-day period, we feel there should be a helpline of an expert panel given by insurance companies during those 30 days’ time where customers can call and clarify their doubts. This will help the customers to understand the policy dynamics directly from the insurers and clarify as required,” added Kasliwal.