What is a Free-Look Period in Life Insurance?
Neviya LaishramAug 1, 2025
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Definition:
A Free Look Period in life insurance is a specified timeframe during which policyholders are free to review their policy terms and conditions without incurring any financial loss. They can cancel the policy if they are not satisfied. This buffer period gives them the opportunity to understand their policy in detail and arrive at an informed decision about keeping it or cancelling it. Let’s look in detail.
Contents
Key Takeaways
Duration: A period during which the policyholder reviews the terms & conditions of the policy and has the option to return the policy and receive a refund.
As per the latest IRDAI Master Circular on Protection of Policyholders’ Interests (June 2024 and updated thereafter), the free‑look period for life insurance policies is 30 days from the date of receipt of the policy document.
Right to cancel: During the free look period, if the policyholder isn't satisfied with the policy terms and conditions he/she can cancel it and request a refund.
Money back: If the policyholder cancels the policy during the free look period, the insurer is typically required to refund the premium paid.
Notification: The policyholder must notify the insurer, stating valid reasons for objection to cancel the policy.
Safety net: The free look, when opted for within the specified timeframe, acts as a protective window for the policyholder to reassess their decision of a long-term commitment to a policy.
Availability: The free look period is a standard feature available as part of life insurance policies.
How Does the Free Look Period Work in Life Insurance
The Free Look Period is simply a consumer protection feature mandated by IRDAI in life insurance. It allows you to cancel a policy without any penalties if you're not satisfied. Once cancellation is approved, the insurer refunds your premium after deducting certain deductions like stamp duty charges, administration fees, expenses for your medical check-up, the proportionate premium for the days you were covered, etc.
Real-Life Example
Priya, aged 32, is an IT professional working in Bangalore. She buys a life insurance policy with a sum assured of ₹50 lakhs. She received the policy document on June 1st. After going through the policy document, she finds that certain terms and conditions listed in the exclusions section do not align with her expectations. Within the designated free look period, Priya decides to cancel the policy on the 10th of June. She writes to the insurer and requests a cancellation. Here is a rough calculation to help you understand how the insurer will calculate Priya’s refund amount.
Refund Calculation:
Premium Paid: ₹25,000
Stamp Duty: ₹500
Medical Exam Charges: ₹1,000
Risk Premium (for 10 days): ₹685
₹25,000 – (₹500 + ₹1,000 + ₹685)
Total refund = ₹22,815
The insurer will process the refund after approving her cancellation request.
Free Look Period Vs Grace Period
Aspect | Free Look Period | Grace Period |
|---|---|---|
Purpose | Gives you time to cancel a newly purchased policy if you're not satisfied. | Gives some extra time to clear your missed premium payment. |
Starts | From the day you receive your policy documents. | From the due date of your premium payment. |
|
|
|
Enables you to | Cancel the insurance policy and request a refund. | Pay the overdue premium without incurring a penalty |
Who | Buyers of a new policy. | Existing policyholders who missed a payment. |
Refunds Given | Given, after relevant deductions such as stamp duty, risk premium, and medical testing charges. | No refund is given; it is only a continuation of the policy. |
Why it's useful | Helps protect you from buying or committing to a policy that isn't right for you. | Helps prevent policy lapse due to delay in payment. |
Why Free Look Period Matters for Policyholders
The Free Look Period lets you get your money back if your life insurance policy doesn’t meet your expectations. It gives you time to review and cancel the policy. Here’s why policyholders should know about the free look period.
Risks of not knowing about the Free Look Period
You may end up holding a policy that doesn’t match your needs and lifestyle.
After the free look period, you lose the chance to cancel the policy without incurring a financial loss.
Reasons for cancellation of the policy
If you find hidden exclusions or unclear terms.
If the insurance agent didn’t clearly explain the policy details, or if your needs changed right after purchasing the policy.
Summary
Free look period is a consumer-centric feature for the conscious policyholder. It helps you stay risk-free and avoid having a policy that doesn’t align with your current needs and lifestyle. It also encourages insurance companies to ensure that the policies they offer are transparent and aligned with the customer’s expectations.
FAQs
Below are some of the frequently asked questions on Free-Look Period in Life Insurance
1. How can I cancel my insurance policy during the free look period?
You must send a cancellation request and provide a reason for cancellation, after which you can return your insurance policy.
2. Am I eligible to get a full refund if I cancel my policy during the free look period?
The insurer may deduct certain charges before processing the final amount. Here are some deductions, charges for medical exam, if applicable, stamp duty, proportional risk premium for the days you were covered, etc.
3. When does the Free Look Period start?
The Free Look Period starts on the date you receive the policy document, not on the date of purchase.
4. Does the Free Look Period apply to all life insurance policies?
Yes, the Free Look Period applies to all individual life insurance policies.
5. What if I miss the Free Look Period deadline?
If you miss the window, you’ll need to follow the surrender or cancellation process, which may result in a loss of premiums, coverage, and reduced benefits, depending on the type of policy you have.
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