Govt Asks Insurers To Extend Free-look Period to 1 Year from 1 Month

Moneylife Digital Team 17 February 2025

Personal Finance

Union finance minister (FM) Nirmala Sitharaman says the government have asked insurance companies to extend the free-look period for insurance policies to one year from the existing one month.

Speaking with media in Mumbai, Ms Sitharaman says, "People can return policy within one year for a full refund of premium if they have mis-sold the insurance. The ministry has completed internal consultations on the Insurance Amendment Bill and needs to make changes in the law before bringing the Amendment Bill."

According to M Nagaraju, secretary of the department of financial services (DFS), the government has introduced a one-year look-out policy and encouraged insurance companies to extend the look-out period from one month to one year. "If a customer wishes to surrender their policy within this period, they have the flexibility to do so. If you want to surrender your insurance policy, please do, you will get the full amount, no questions asked."

Free-look period is the time period in which policy can be terminated without any penalties.

"Once an insurance policy is sold, a follow-up call is made to customers to confirm whether they are satisfied with the product or not. We have also urged private sector insurance companies to implement the same callback mechanisms. These will help reduce misselling," Mr Nagaraju says.

Once a Insurance policy is sold, a follow-up call is made to customers to confirm whether they are satisfied with the product or not

We've also urged Pvt. Sector insurance companies to implement same callback mechanisms

These will help reduce misselling

– Secretary @DFS_India
— PIB in Maharashtra ???? (@PIBMumbai) February 17, 2025

FM Sitharaman also spoke about the Income Tax (I-T) Act which is set to be replaced by the new law which is currently under review by the select committee of Lok Sabha. She says, "With 60,000 inputs received, it is one of the most comprehensive tax reform exercises undertaken and reflects the spirit of jan-bhagidaari. The new law will reduce complexity by consolidating provisions, reducing the number of sections from 800 to 500, and simplifying language for better interpretation."

The FM also praised the central board of direct taxes (CBDT) for completing this monumental task within six months, stating, "This is a landmark effort towards simplification and transparency in taxation. Our aim is to make compliance easier and more efficient for every taxpayer."

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