Categorized | Health Insurance

Important facts about free look period of a health plan

The Insurance Regulatory Development Authority (IRDA), which is an autonomous apex body intended for the regulation of the insurance industry in India has issued several notifications with regard to the Free look period associated with insurance policies including health insurance. A free look period for an insurance Policy is that period of time before which a policy buyer after buying insurance is allowed to terminate the insurance contract and get a refund for the Premium without having to incur any penalties or charges.

One of the key reasons why IRDA has made it mandatory for insurance companies to provide a free look period is to make sure that individual buyers are not duped by the insurance advisors with regard to the key policy terms and conditions. Some cheap Health Insurance companies may promise about benefits which may not be available, while some companies understate the premium costs for subsequent years and cheat individuals.
 
As per a circular issued by the IRDA, all health insurance policies which have a duration of three years or more, are required to have a free look period. This period would allow 15 days to the policy buyer after the receipt of the policy to go through the terms and conditions of the policy. If the buyer finds any terms and conditions attached with the contract as unacceptable or objectionable, he has the right to refuse the policy and get a refund for the premium. The premium refunded will be reduced by an amount of the expense that the insurance company has incurred in issuing the policy. The expenses that are allowable for deduction include expenses towards physical or medical examination of the Insured person and the stamp duty. The Policyholder should make sure that they send the original copy of the policy document to the insurance company. Most companies dealing in health insurance in India would require that the documents reach to them before the completion of free look period.

If by the time the policyholder decides to terminate the contract, and the Risk has already commenced, then in that case, the refund of the premium paid will also be subject to a deduction for proportionate risk premium for the period on cover.

Where the period of the health plan is less than 3 years, in that case it is not mandatory for health insurance company to provide for a free look period. If at all a free look period is provided it would be at the sole discretion of the health insurance company.

Buying policies online is a good way to make informed decision

If you buy health insurance policies online, you can cut down a lot of risk in terms of being offered a health plan which does not offer you the same benefits as you desire. When you get health insurance online, it not only lower costs, but also empowers you to make more informed decisions. You may compare across plans and choose the best health plan.