Free-Look Period in Insurance: Why is IRDAI proposing its extension to 30 days?

financialexpress.com:

In a move that could significantly impact insurance consumers in India, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed to extend the free-look period from 15 days to 30 days. This proposed rule aims to provide policyholders with more time to review their insurance policies thoroughly before committing to them. But what exactly is the free-look period, and how is this extension going to impact consumers?

The free-look period serves as a crucial safeguard for policyholders, akin to a ‘test drive’ before making a significant financial commitment. It allows individuals to scrutinise the terms, coverage details, exclusions, and associated costs of an insurance policy after receiving it. During this period, if the policyholder finds the terms unsatisfactory or if the policy doesn’t meet their needs, they have the option to cancel it without facing any financial penalties.

This proposed extension holds several implications for insurance consumers:

Insurance policies, particularly unit-linked ones, often come with intricate details that may not be immediately apparent. Extending the free-look period to 30 days provides policyholders with more time to delve into the complexities of these policies. This extra time allows for a thorough evaluation, enabling consumers to make more informed decisions regarding their insurance coverage.

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A longer free-look period serves as a deterrent to unethical practices such as mis-selling. “With 30 days to review the policy, policyholders are less likely to be rushed into making decisions based on incomplete or misleading information. This extension promotes transparency and ethical conduct within the