Can an insurance policy be canceled after one year?

An insurance policy can be canceled during the free-look period (generally 15 days). If you don't want to continue your policy after one year, then you can surrender it. However, the policyholder will not receive the premium already paid. If you surrender your policy after paying the premium for a minimum of three years, then only you will receive 40% (approx.) from the company.

Read How People Fall Into Insurance Mis-selling Trap

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Did you receive a call from a fraud tele-caller? Did they misguide you to buy an insurance policy that you don’t need? Did you believe whatever they said? Did you verify the details and the promises they made from the insurance company? If you did not cross-check with the insurance company, then there are chances that it can be a case of mis-selling in insurance.

Here’s how Birju was misled to buy a policy and fell prey to insurance misselling.

Tele-Caller: Namaste Birju Ji, I am calling from XXX insurance company. According to my records, you have taken two insurance policies from our company. Am I right?

Birju: Namaste Sir Ji. Yes, I have taken two life insurance policies from your company. One for me and one for my wife.

Tele-Caller: Ok. Since you are our valued customer. Let me tell you this plan is getting discontinued because of poor performance. We are advising all to switch to a new guaranteed plan. Your all money will be transferred to the new plan and you will also receive a cash bonus of Rs. 50,000.

Birju: Ok, thanks, you called up. What will happen to my old policies?

Tele-Caller: Sir, this will be transferred to new endowment policies and you will not have a loss. This is a special offer for selected customers where you will receive Rs 50,000 on payment of Rs 60,000 for the new policy. Your earlier plan was non-guaranteed and your new plan is guaranteed,

Also Read: Beware of Insurance Mis-selling: Safeguard Your Money and Future: Part 2

Birju: That means, earlier that agent made me a murakh? I shouldn’t have bought term insurance.

Tele-Caller: No sir, it was not his fault. Both policies have their own benefits.

Birju: hmmm…

Tele-Caller: Sir this policy is only available for a limited time. Do you need it?

Birju: Seriously? Quickly tell me, how much premium do I need to pay? How long is the policy?

Tele-Caller: You need to pay Rs 60,000 on a yearly basis for 10 years. And you will receive Rs 10 lakh as a death benefit or maturity benefit, whichever the case may be.

Birju: For 10 years? Umm…I don’t want to buy this policy.

Tele-Caller: Sir, don’t worry about anything. I think you should buy the policy. After 1 year, if you feel that you don’t want to continue this policy, then you can cancel it. But I advise you to continue the policy for at least a year.

Birju: Oh, so I can cancel this policy after a year too? And what about the premium which I would pay in the first year?

Tele-Caller: Yes, you can cancel a policy after a year. And the already paid premium can be recovered.

Birju: Ok then, I’ll purchase the new policy from you. What do I need to do?

Tele-Caller: Good decision sir. I’ll send you a link, and make the payment on that link. After that, an OTP will also be sent to you. Send me that OTP. The OTP will ensure that you confirm the purchase.

Birju: ok…wait a minute……I paid the premium. OTP is ****

Tele-Caller: Thank you, sir. One more thing sir, you’ll receive a call from the insurance company for confirmation. Agree with whatever that person says. It will make the process quick.

Also Read: Insurance Policy Mis-Sold by A Fake GBIC official

Birju: Ok Ji.

Tele-Caller: Thank you, sir.

Here Birju, a 40-year-old farmer was misguided to buy an endowment insurance policy. He already had an insurance policy and had no intention to buy an endowment policy. However, he was coaxed to buy the policy. He was also misguided that he can cancel his policy and recover the already premium money after 1 year from the date of issuance. He was also not told the fact that during the free-look period, he can reconsider the policy.

A policyholder can cancel his policy during the free-look period. There is no system where an old policy can be converted into a new one. The old policy will be surrendered giving approx. 40% of paid premium.

If you are misguided by someone to buy an insurance policy, then contact your insurance company and inform them about such mis-selling. If you are unable to get your money back, then contact Insurance Samadhan.

Insurance Samadhan has resolved more than 14,500 complaints related to insurance. Insurance complaints include insurance mis-selling, claim rejection, delay in claim settlement, etc. Contact us to get samadhan for your insurance-related issues, we’ll be happy to help you.