The BuyT Desk
Have you purchased a life insurance policy only to find that you disagree with the terms and conditions in the fine print? You feel deceived. You see the policy as a liability rather than a saviour. In this case, health insurance policies are better because they have a Free Look period. If you disagree with the terms of the policy, you can return it without a loss during this period.
Nonetheless, not all hope is lost if you have issues with your life insurance policy. According to the Insurance Regulatory and Development Authority of India (IRDA) guidelines, you can cancel a life insurance policy within 15 days from the date of receipt. If you bought the policy online then the cancellation period extends to 30 days from the date of receipt. You can cancel your policy by following three easy rules. Understand these rules in the following paragraphs.
How to return the policy?
You are convinced that the purchased life insurance policy does not satisfy your purpose. The first step is to write to the insurance company stating your objections. In some cases, the company may have a prescribed format. Do mention the date of receipt, policy number and other details, reason(s) for cancellation, and agent details in your application. The insurance company will try to resolve your issues. If still unconvinced, you can cancel the policy. Remember, you have the onus of proving the date of receipt of the policy.
What will the insurance company refund and deduct?
According to the IRDA guidelines, the insurance company will refund the premium you paid. However, instead of receiving the premium in full, there will be deductions. The insurance company is entitled to deduct the following charges before cancelling your policy:
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Stamp duty charges
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Expenses for medical examination of the policyholder
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A pro-rata risk premium for the period on cover
What will the insurance company refund in the case of a ULIP?
ULIP is a market-linked policy. Hence, the insurer will refund the premium considering the value of the units on the date of policy cancellation. Also, they will deduct the mandatory charges first.
Before policy cancellation, you may ask for alterations in the policy like mode of payment, premium redirection, policy term, and an increase in the sum insured. ULIPs provide you with rights to partial withdrawal and switch funds.
Bottom Line
Do not be upset about buying a life insurance policy with disagreeable terms and conditions. Follow simple IRDA guidelines to cancel the policy in 15 days from the date of receipt.
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Send a cancellation request mentioning the reasons for objection to the insurer.
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Expect a refund of the premium paid after mandatory deduction of certain charges.
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In the case of a ULIP, the refund will depend on the market value on that day.
