When Mumbai-based Suresh Kamdar bought a health insurance policy last year, his agent promised that the document would reach him soon. It didn't. When he got the premium receipt a few weeks later, Kamdar was shocked-he had been sold a policy that was different from what he had applied for.

For Rajendra Khosla, the shock was even more severe when he received the premium notices for policies he had never bought. The retired builder had given signed cheques to a bank relationship manager to invest in fixed deposits, but she sold him three life insurance policies instead. The septuagenarian discovered the fraud 11 months later when the second premium was due.

In both the cases, the agents made sure that the 15-day free-look period had lapsed before their misdeeds were discovered. According to rules, an applicant can return an insurance policy within 15 days of receiving the document. The Insurance Regulatory and Development Authority ( Irda )) decided to empower life insurance buyers when it provided this opportunity in 2002. In September 2009, this was extended to health policies as well.

The 15-day period starts from the time an insurance policy reaches the buyer. It's a reasonable period for the policyholder to go through the fine print and understand the policy's nuts and bolts. If there is a mismatch between what was promised by the agent and what the customer gets, the latter can return the policy and his premium has to be refunded after minor deductions. Thus, the free-look period acts as a sturdy shield against mis-selling.

However, as the two examples mentioned earlier show, unscrupulous agents and distributor banks try to deprive the policyholders of this facility. While insurance companies tend to send policy documents directly to customers, they sometimes route these through agents. The latter withhold the policy and give it to the customer only after the 15-day period is over. In this manner they ensure that the policy is not returned.

This raises some obvious questions. Firstly, why do insurance companies send the policy documents through agents and distributors? Why aren't these sent directly to the policyholders? "Some insurers say this is done to provide the agent or distributor an opportunity to interact with the client and, hence, develop stronger bonds with them," says certified financial planner Pankaj Mathpal, managing director, Optima Money Managers.

This loophole makes a mockery of the free-look period. It's time that the insurance regulator changed this rule and made it mandatory for policies to be sent directly to the policyholder, not through the agent. "This is a good practice not only from the free-look point of view, but also to help validate the mailing address of the policyholder," says P Nandagopal, CEO, IndiaFirst Life Insurance.

Used wisely, this period can help avoid the heartburn that comes from choosing the wrong insurance policy. If you are not satisfied with any clause or exclusion, discuss the matter threadbare with your insurance agent . If still not convinced, return the policy to the company. Make sure you do this before the 15-day deadline. Delhi-based Raj Kumar faced a problem because his cancellation request reached the company on the 16th day. Kumar wanted to buy a medical insurance policy, but the agent sold him a life insurance plan with a medical rider.

When he received the policy document, Kumar immediately called up the agent and demanded an explanation. The agent gave flimsy excuses and offered to have the policy changed. When there was no progress after two days of dilly-dallying, Kumar realised that it was a ruse to buy time. He immediately couriered the policy to the insurer.

Source: ET