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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Life Insurance Products

A client wants to buy a life insurance policy and asks what the 'free look period' allows. Which statement is correct as per IRDAI policyholder protection norms?

The free look period lets a policyholder review the policy after receiving it and return it if the terms are unacceptable. The insurer refunds the premium after deducting permitted charges such as proportionate risk premium, medical examination costs and stamp duty.

  1. AIt allows the policyholder to review the policy terms after receiving the policy document and return it if unsatisfied, with deduction of certain chargesCorrect
  2. BIt allows the policyholder to cancel the policy at any time during the term and recover full premiums
  3. CIt extends the grace period for payment of premiums by 30 days
  4. DIt allows the insurer to reject a claim within the first three years

Explanation

The free look period lets the policyholder review terms after receiving the policy and return it if not satisfied; the insurer refunds the premium after deducting items such as proportionate risk premium, medical costs and stamp duty. It is unrelated to the grace period or claim rejection, and it is not available throughout the term.

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