We all make an impulsive purchase and regret the decision later. Buying life insurance is no different. You may have seen an online advertisement and immediately purchased a life insurance policy for tax-saving purposes. When purchasing a life insurance policy, several things can go wrong, from being misinformed about the policy terms and conditions to having insufficient sum assured.
So, the big question is – what to do if you are unhappy with your life insurance plan? Do you want to stay stuck to the policy? Or is there a way out? Here are a few tips to help you come out of your predicament:
Use the free look period to your advantage
As per the IRDAI (Insurance Regulatory and Development Authority of India) rules, all new life insurance policy buyers can terminate their plan and get a refund within a specific period (usually 10-30 days) if they are not happy with any aspect of the policy. This period is called the free look period.
Suppose you are not happy with the insurance company’s services or think the policy terms and conditions do not suit your needs. In that case, you can return the policy without incurring any penalty. To return the policy, you must inform the insurer in writing that you want to return your life insurance policy and state the reason for it.
Upon receiving your return request, the insurer will return the premium after deducting the expenses they may have incurred, such as medical tests, stamp duty, etc.
Let the term plan lapse
Term insurance is one of the most popular types of life insurance policies in India. Many people prefer buying a term plan mainly because of its low premium. However, did you know that most term insurance policies do not give you the option to surrender the plan?
So, if you choose to exit the plan, you may end up losing the premium amount you have paid since the policy came into effect. So, what should you do if you are not happy with your term plan?
You have two options here. One, return the policy during the free look period and get the refund of premiums you may have paid. Two, stop paying the premium and allow the policy to lapse on its own.
Consider buying riders
If you are unhappy with your life insurance policy because the sum assured is low, you can consider buying add-ons or riders to increase the coverage scope and amount. Although purchasing a rider would require you to pay an additional premium, it will save you from the hassles of returning the policy and buying a new one.
More importantly, it will ensure that you have insurance protection all the time. Besides, buying a rider will help you get additional protection against risks that are not covered in your standard policy.
Surrender your ULIP and endowment plan
If you hold a ULIP or endowment life insurance policy, you can surrender the same and voluntarily terminate the policy. However, you must know that both these plans have a lock-in period of three years. So, if you surrender the policy within the lock-in period, you wouldn’t get any returns.
If you surrender the policy after three years, but before five years, the insurance company will pay back the surrender value after deducting the surrender charges and fund management charges. However, if you surrender the plan after five years, the insurer cannot levy surrender charges as per IRDAI rules.
While buying a life insurance policy, ensure that you compare the different plans and choose the one that suits your specific requirements and budget. If you have any doubts, it is better to consult an expert than to buy any random plan and regret it later.