Friday, April 08, 2011

Free Look Period for Life Insurance Policy

A life insurance policy sold in Singapore comes with a 14 day free look period. It allows the policyholder to cancel the policy within 14 days and get a full refund of the premium that has been paid.

If this is an ordinary life insurance policy, the premium has to be paid in full. If this is an investment linked policy, the policyholder will have to suffer any loss due to a change in the market value of the units. However, there should be no deduction for agent's commission or other expenses.

If you wish to cancel the policy, you have to notify the insurance company directly. Do not go through the agent, as the agent may not submit this request to the insurance company. If you have bought a life insurance policy recently, and you are not told about the free look period, you should lodge a complaint to the regulator (MAS) that the insurance company is not complying with this requirement.

If you are not getting a refund according to my understanding, as set out above, you can bring the matter to my attention. I will see if there is any change in practice that is different from my undrestanding.

Tan Kin Lian
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3 comments:

Spur said...

Most companies will also deduct the expenses for medical checkup, if there was one. Usually insurers will require the customer to undergo medical checkup with one of their approved doctors for the following cases:-
1. Sum assured is large e.g. $500K and above.
2. Customer has certain medical history e.g. heart murmur.

The company and the agent must inform you of the above penalty in writing, before you actually go for the medical checkup. So at least you're aware that if you cancel, the company will deduct from the premium refunded.

You should also check with the doctor / medical centre you're going to, roughly how much will the checkup cost.

April 08, 2011 11:16 AM
zhummmeng said...

There are few warnings that have be sounded to the customers orally or in writing. But unfortunately , no agent has disclosed and MAS also pretends they don't hear and don't know.
1. disclosure of commission , asked or not asked.
2.Free look right to cancel.
3.Very important and NO agent has warned the customers of this action, ie. if a customer 'chooses'
product advice or option 3 he or she has to be warned of the loss of legal recourse if anything goes wrong, at the beginning and at the end of the advisory process.This means the agents and the company are absolved from all blames from all outcomes arising from this action.
Is MAS aware? No! is it a wonder why insurance companies continue to breach this requirement?

April 08, 2011 6:17 PM
Vincent Sear said...

The usual and fair practice in medical exam cases is that if the policy is offered at standard rating and taken up, the medical is free. If there's loading or decline, it's free too. If it's offered at standard rating but not taken up, then the potential client pays. I say it's fair because otherwise, anybody wanting a free medical checkup can call an agent and pretend to want to buy a policy. Let's be fair to both sides.

April 09, 2011 1:17 AM

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