Union Finance Minister Nirmala Sitharaman asked insurance companies to increase the free look period to one year from one month at present, CNBC-TV18 reported on Monday, February 17.
Nirmala Sitharaman also reportedly said that a committee, appointed by the Insurance Regulatory and Development Authority of India (IRDAI), has finished the internal consultation process on the Insurance Amendment Bill and will have to change the law before introducing the bill.
The insurance regulatory body earlier appointed a committee to recommend suggestions on the role of intermediaries, as per the report.
What is a free look period in insurance?
According to the insurance regulatory body, the “free look period” in an insurance policy is a grace period during which new policyholders can review the details of their new policy and cancel.
This cancellation will be accepted in case the policyholder does not find the terms and conditions of the insurance policy acceptable. This means the purchaser of the policy will not be charged any penalities in case they decide to terminate the policy agreement within the set period.
The free look period of an insurance policy is at least 15 days. The period will be 30 days in case of an electronic policy and other policies sourced through distance mode.
The free look period is applicable to all life insurance policies, but in the case of health insurance policies, the term period has to be at least three years to become eligible for the free look period.
Benefits of free look period
Apart from the flexibility to cancel at any time during the free-look period, the option also offers other benefits if the policyholder does not make any claims during the period.
