Under the legal framework, a window of 15 days is provided as a free-look period starting from the day of receiving the policy document by the policyholder. Within this stipulated timeframe, the policyholder retains the prerogative to annul the policy and receive a reimbursement.
The privilege of a free-look period is extended exclusively to life insurance policies. However, for health insurance policies, the requisite duration for this period should span a minimum of three years.
In most cases, a cancellation provision clause necessitates that if one party decides to terminate the policy, they must communicate their intent through a written notice to the other party involved. Simultaneously, the insurance company is obligated to reimburse any previously paid premium on a pro rata basis.
As an illustration, consider a scenario where the insured has paid the premium for a duration of three months but decides to terminate the policy at the conclusion of the second month. In such an instance, the insurance company is obligated to compute the premium corresponding to the remaining month and subsequently reimburse this portion to the insured party.