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Two friends meet for coffee and the conversation veers to ‘free look’ period, the often overlooked aspect of insurance purchase process.
Shyam: Can’t believe they printed such a long bill for a cuppa. Imagine what actual contracts look like and if anyone really goes through them?
Josh: Only since you brought it up. I did go through my health insurance contract last week, spotted a point of difference from what was originally offered to me and I am currently speaking to the insurance team to correct it. I am saved because I was in the ‘free look’ period of the policy and I could put it on hold.
Shyam: What is a free look period?
Josh: It a period of time, generally 15 days, that you can use to go through the actual policy contract and if you spot any point of difference, you can terminate the policy without any charges.
Shyam: Ok, but shouldn’t you have all the conditions in place before you choose a policy? What are the differences that you are expecting to find?
Josh: True in most of the cases. But insurance sales are executed over several channels, intermediaries and entities. From the actual source to the final policyholder, some discrepancies might have crept in, intentional or otherwise. So whatever were your expectations before purchase, they should be in a written contract after your purchase. Also, relationship managers, bank channels, aggregators and insurance brokers might have in place specific conditions to attract customers. If those conditions were a big part of the purchase decision, it would make sense to ensure that in writing.
Shyam: That is akin to a Chinese whisper game but with big stakes. Also, don’t you get a brochure before purchase?
Josh: True, you get a brochure and a policy document before purchase. But these documents are ‘one size fits all’ literature for all customers across age brackets, conditions, offers and riders. But in insurance, you get the actual contract with your details and specific conditions only after the first premium is paid. By which time it might be too late for you to pull out, unless you are afforded a free look period.
Shyam: This should cut down on insurance mis-selling, which I believe is plaguing the industry.
Josh: Yes. Insurance is seen as a complicated purchase and hence ‘outsourced’ to agents or others. But as a final step, the regulator IRDAI has forced a free look period to weed out such cases before actual policy period sets in.
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