Life insurance mis-selling, free-look cancellation and fake 'IRDAI' calls: how to protect yourself

If a life policy was sold to you as something it is not, such as a "fixed deposit", a "one-time investment with guaranteed triple returns" or a policy "required" for your loan, act quickly. Within the free-look period after you receive the policy document, you can return it for a refund of the premium, less permitted deductions, without giving reasons. IRDAI's 2024 policyholder protection rules provide a free-look period of 30 days; check the period printed in your policy. After that, complain in writing to the insurer about mis-selling, then use IRDAI's Bima Bharosa and the Insurance Ombudsman. Be wary of calls claiming to be from IRDAI, the Ombudsman or a "policy refund department": IRDAI does not sell policies, collect premiums or pay bonuses, and genuine refunds never require you to buy a new policy or pay a "processing fee".

This guide belongs to the claim process and IRDAI timelines guide.

Signs a policy was mis-sold

Compare what you were told with the benefit illustration and the policy document. The illustration must show guaranteed and non-guaranteed amounts separately.

Using the free-look period

1. Read the policy as soon as it arrives: the product name, premium, premium payment term, policy term, sum assured, maturity value and the proposal form copy.
2. If it is not what you agreed, write to the insurer within the free-look period asking to cancel, quoting the policy number. Use the insurer's official channels: its website, email or branch.
3. Return the policy document if a physical copy was issued.
4. The insurer refunds the premium after deducting the proportionate risk premium for the days you were covered, the cost of medical examination and stamp duty; for ULIPs, the refund also reflects the change in unit values.

Illustrative. Annual premium ₹1,00,000 for a savings policy. You cancel on day 20. Deductions: risk premium for 20 days ₹300, medical examination ₹1,500, stamp duty ₹200. Refund: ₹1,00,000 − ₹2,000 = ₹98,000. The actual deductions depend on the product and your case.

Count the free-look period from the date you received the policy document, not the date of issue. Keep proof of delivery or the email date for electronic policies.

After the free-look period: complaining about mis-selling

If you discover the problem later, you can still complain:

1. Write to the insurer's grievance redressal officer explaining what you were told, by whom, and what you received. Attach any messages, brochures or recordings.
2. Ask for the cancellation of the policy and a refund of premiums, or correction of the terms.
3. If there is no reply in 30 days or you are not satisfied, register the complaint with IRDAI's Bima Bharosa system.
4. You can then approach the Insurance Ombudsman, which hears complaints about misrepresentation of policy terms, within one year of the insurer's final reply. See the Ombudsman guide.

The sooner you complain, the stronger the case; a complaint after many years of paying without objection is harder to win.

Fake calls and messages

Fraud patterns that target policyholders in India include:

• Calls claiming to be from IRDAI or an Ombudsman office, offering to release "frozen bonuses" or "refunds of lapsed policies" if you pay a fee or buy a new policy.
• Messages offering to revive old policies through a "settlement agent".
• Fake websites or apps that look like an insurer's, asking you to pay premiums to a personal UPI ID.
• Callers who already know your policy number and name, which can make them sound genuine.

How to respond:

• Hang up and call the insurer on the number from its official website or your policy document.
• Never pay premiums to an individual's bank account or UPI ID. Pay only to the insurer.
• Never share OTPs, net banking passwords or card details on a call.
• Report cyber fraud on the national helpline 1930 or at the National Cyber Crime Reporting Portal, and suspicious calls through the Department of Telecommunications' Sanchar Saathi portal.

Verifying insurers and agents

• Insurer: check the list of registered life insurers on the IRDAI website. A name that is not on the list is not a licensed insurer.
• Agent or intermediary: ask for the licence or registration number and verify it with the insurer, or on the IRDAI website for brokers and other intermediaries.
• Website: type the insurer's address yourself rather than following a link in a message.

Checklist when someone offers you a policy

• Ask whether it is a term plan, endowment, money-back, whole life or ULIP.
• Ask for the benefit illustration and the sales brochure, and check guaranteed vs non-guaranteed amounts.
• Ask what cover it gives and whether that meets the need from the life cover calculator.
• Ask about premium payment term, lock-in and surrender values.
• Fill or check the proposal form yourself; see the buying checklist.
• Take time; a genuine offer does not expire today.

If you are thinking of surrendering a mis-sold savings policy after the free-look period, read lapsed policy, revival and surrender first.

Frequently asked questions

Can I cancel a policy bought at a bank branch?

Yes. The free-look right applies however the policy was sold. Write to the insurer, not only to the bank, and keep the acknowledgement.

Does the free look apply to term plans?

Yes. The refund for a term plan is the premium less the proportionate risk premium and other permitted deductions.

A caller says my old LIC or private policy has ₹5 lakh unclaimed. Is it real?

Insurers do hold unclaimed amounts, but you can check them yourself on the insurer's official website using your policy details. Do not pay anyone to "release" them.

Sources

• IRDAI — list of registered insurers, policyholder protection rules on free look, Bima Bharosa grievance system and public warnings on spurious calls
• Council for Insurance Ombudsmen — complaints about misrepresentation of policy terms
• National Cyber Crime Reporting Portal — report online and phone fraud (helpline 1930)
• Sanchar Saathi — report suspicious calls and messages