How to cancel the LIC policy within grace period?

How to cancel the LIC policy within grace period? Many a time we end up buying an insurance policy at the insistence of the insurance agent. However, after the documents are signed and we get the policy in hand, we discover that the policy is of very little use to us. What do we do in such a scenario? Resign to fate and stick to the policy? Absolutely not! Thanks to the Insurance Regulatory and Development Authority (IRDA), policyholders now get a 15-day time span during which they can return the policy and get a refund. This is called the free look period.

According to IRDA, i.e. the Insurance Regulatory and Development Authority provide a window to the policyholder or 15 days from the date of receipt of the Policy Bond to cancel the policy without charges. This is called “Free Look Cancellation”.

Basically, whenever a policyholder is not happy or satisfied with the terms and conditions mentioned on the policy bond or needs to cancel the policy without charges, he will have to do so within the first 15 days to avail the benefit of the freelook cancellation.

Is the entire amount refunded?

If you decide to return the insurance policy during the free look period, you will get a large chunk of your money back, but certain deductions will be made by the insurance company. The deductions are minimal and you do not end up losing a lot of money. Please note here, that if you terminate an insurance policy during the free look period, you will not have to pay the surrender charges.

Why don’t I get a complete refund?

The insurance company deducts the following charges from the amount you paid initially:

• Cost of the medical tests
• Cost of the stamp paper
• Proportionate risk premium

As a result, you don’t end up receiving the exact sum of money you had paid. But like mentioned above, these deductions are quite less and don’t hurt you much.

Documents required for Free Look Cancellation

Cancelling the LIC policy can be a task job on its own as it requires a whole bunch of documents along with the policy which needs to be physically submitted to the home branch by the policyholder himself. If a representative goes to cancel the policy on his behalf, he might not be entertained on grounds of possible moral hazards.

List of Documents to be submitted while Free Look Cancellation:

• Original policy bond
• First Premium Receipt or FPR, i.e. premium payment receipts
• Letter of cancellation duly signed by the policyholder
• FreeLook cancellation form duly signed by the policyholder
• Policyholder’s KYC, i.e. self attested photocopy of PAN Card and Address Proof
• Cancelled cheque of the policyholder

Thus, the list of documents along with the letter for cancellation and original policy bond needs to be submitted at the home branch and duly accepted for the freelook cancellation to take place. However, it takes about 20-25 working days for the policy to get cancelled after verification and the proceeds to be credited.