Published in Mint on May 31 2016, Written by Abhishek Bondia
Can I cancel my policy during the freelook period? What is the process to cancel my policy during this period? Will I get my premium amount back?
Yes, you can cancel your policy within the freelook period. The purpose of the period is to allow an insured to cancel her life insurance policy without any surrender charges. The freelook period is for 15 days from the date of receipt of the hard copy.
You should submit a written application for cancellation to the insurer within the freelook period. The insurer would require you to fill a cancellation form, and return the original policy copy. You are not obliged to specify a reason for cancellation. The full initial premium will be refunded to you subject to deduction for mortality charges for the covered period, stamp duty charges, and costs incurred by the insurer for medical examination.
How can I revive a lapsed or discontinued policy?
If the premium is not paid within the grace period after the due date, the policy is considered to have lapsed. Most policy benefits expire in such a case. In case of lapsed policies, insurers can apply fresh terms and conditions before reviving it. A policy can be revived by paying all due premiums with interest. An insurer can ask you to undergo a fresh medical test before reinstating the policy. If the revival is sought within six months of lapse, the policy is reinstated without a medical test. In other cases, insurers base their decision about medical examination on duration of lapse, sum assured involved and years of premium paid.
Should I go for an accidental death rider in my term life insurance policy?
An accidental death rider will give the nominee a higher payout if the death of the insured is due to an accident, subject to the exclusions prescribed by insurer. This rider is cheaper than the base life insurance benefit. But the coverage is limited when compared to a stand-alone accident insurance cover. Under the stand-alone policy, apart from death, disability due to accident is also covered. You can buy a stand-alone accidental insurance policy instead of the rider in a term life insurance policy.
I am 30 years old. Is it too early to buy a pension plan?
The right time to buy a pension plan is in fact when you are young. Small savings over a long period of time accumulate into a large corpus if invested wisely. This can then be used to buy an annuity at the time of retirement. There are several pension plans that you can consider, ranging from the National Pension System to unit-linked pension plans to regular mutual funds, where you can buy an immediate annuity. The focus of all these plans is on fund accumulation. The decision of which annuity to buy is taken when the fund matures.