Move Aims to Prevent Mis-Selling of Insurance Policies
The Indian government has urged private insurance companies to extend the free-look period for policyholders from one month to one year, according to Department of Financial Services (DFS) Secretary M Nagaraju.
The free-look period allows customers to cancel their insurance policy without incurring surrender charges. In 2023, the Insurance Regulatory and Development Authority of India (IRDAI) had already increased the period from 15 days to 30 days.
Policyholders Can Get Full Refund Within One Year
Speaking at a post-Budget press conference in Mumbai, Nagaraju stated,
“The government encourages insurers to extend the free-look period to one year. If a policyholder chooses to cancel within this period, the insurer must refund the first premium paid.”
‘Call Back’ System to Prevent Mis-Selling
To further safeguard policyholders, the government has also asked public-sector insurers to introduce a ‘call back’ system, where companies contact customers after selling a policy to:
- Ensure they understand the product.
- Offer them an option to cancel if unsatisfied.
The same request has been made to private insurers, as part of efforts to curb mis-selling.
Fewer Complaints Reported
According to the DFS Secretary, these measures have already led to a reduction in customer complaints, suggesting improved transparency and consumer protection in the insurance sector.
