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31 May 2024

6 must-knows before cancelling your insurance / takaful plan in free look period

6 must-knows before cancelling your insurance / takaful plan in free look period

Making choices about insurance / Takaful is important for safeguarding our financial security, whether it involves protecting our family's future, ensuring our health is covered, or preparing for retirement. But what should you do if you've already agreed to an insurance / Takaful plan but are starting to have doubts about your decision? This is when the free look period becomes important. It’s a crucial safety measure that gives you a chance to review your plan, ask for explanations, and verify that you’re making a knowledgeable choice.

In this article, we will examine the details of the free look period, analysing its subtleties and importance when selecting your insurance / Takaful plan. We will talk about important factors to consider before deciding to cancel your insurance / Takaful plan, explain the reasons for such decisions, and help you through the process of free look cancellation. Let's explore the intricacies of insurance / Takaful and help you make informed decisions with confidence and clarity.
 
What Is the Free Look Period?
The free look period offers a valuable opportunity akin to a "try before you commit" phase. Picture unboxing a new device—you have the chance to discover its attributes, try out its performance, and determine if it fits your requirements. Likewise, upon receiving your insurance or Takaful plan, you’re given a specific timeframe to examine all aspects carefully. During this time, you can:
  • Read the Fine Print: It’s important to carefully examine the policy document to understand the coverage, exclusions, and specific terms and conditions that are in place. Comprehending these specifics can help avoid confusion and make sure you know what your plan includes.
  • Ask Questions: Take advantage of the chance to talk with your insurer or advisor without any reservations. Inquiring about any unclear or ambiguous aspects of the plan can help you understand better and make more informed decisions regarding your coverage.
  • Evaluate Fit: Assess whether the plan aligns with your unique financial objectives and lifestyle requirements. Consider factors such as premium / contribution affordability, coverage limits, and the flexibility of the plan to meet your evolving needs. This evaluation ensures that the insurance or Takaful plan you choose adequately addresses your specific circumstances and preferences.
How Long Is the Free Look Period?
Whether you purchased the insurance/Takaful plan from an offline channel (i.e., advisor, agent, broker) or chose to buy directly from the provider’s official website, you will typically be granted a free look period of 15 calendar days to review the plan. However, the exact length of the free look period for each method is subject to the provider’s terms and conditions, and you can refer to them for further information.

No matter what avenue is chosen, this time frame provides protection, giving plan owners the opportunity to review their coverage and adjust as needed. It's crucial to remember to mark your calendar and make the most of this opportunity to guarantee that your plan meets your needs and expectations.
 
6 Things to Consider Before Cancelling Your Insurance or Takaful Plan
Prior to making a decision to cancel your insurance policy / Takaful contract, it’s important to consider various factors.
 
1. Coverage Adequacy
Think of your plan's coverage like a tailored suit—it should fit just right. Assess whether it adequately protects your loved ones and addresses your specific needs. Consider aspects such as protection against critical illnesses or disabilities, and identify any potential gaps that need addressing.
 
2. Exclusions
Exclusions within your plan serve as warning signals, indicating cases where your coverage will not be valid. Make sure to carefully go over this section to make sure you’re fully aware of all restrictions. For instance, if you're a fan of extreme sports, be sure to check that your insurance policy / Takaful plan covers these activities to prevent any unexpected issues.
 
3. Premiums / Contributions
Assessing if you're receiving worth for your premiums / contributions is crucial because finances are important. Make sure to compare the cost of your plan with other similar ones on the market to make sure you’re getting a good deal for the coverage you receive. Don't forget, long-term affordability is crucial.
 
4. Alternatives
Don't limit yourself to your current plan if there may be better options available. Research alternative plans to see if there are any with more comprehensive coverage or lower premiums / contributions. Exploring alternatives ensures you're making the best decision for your financial security.
 
5. Plan Flexibility
Life is unpredictable, so it's crucial to consider how flexible your plan is. Can you easily adjust the coverage as your life circumstances change? Look for plans that offer flexibility and allow modifications without unnecessary hassle, ensuring your insurance / Takaful adapts to your evolving needs.
 
6. Cooling-Off Period
The free look period, also referred to as the cooling-off period, is an essential component of insurance and Takaful plans. Within this designated period, you're entitled to examine your plan carefully. If you find any reason to reconsider your decision, you can cancel the insurance policy / Takaful contract.

This cancellation usually comes with no financial penalties. However, it's worth noting that some providers may deduct expenses that have been incurred for medical underwriting, so it's advisable to check the specific terms of your policy or contract regarding any potential deductions during the free look period.
 
Reasons to Cancel an Insurance Policy / Takaful Contract
During the free look period, policy / contract owner may find themselves considering cancellation for various reasons:

- Changed Circumstances
Life is full of unexpected surprises, ranging from job opportunities to significant life events such as marriage or moving. It's important to review your insurance / Takaful plan to make sure it still fits your situation, as changes can significantly impact your insurance / Takaful needs.
 
- Better Options
As the insurance and Takaful industry continues to change, newer plans may provide better features or benefits than your current ones. In case you come across a plan that aligns more with your needs and objectives, feel free to consider it as a replacement for your current coverage.
 
- Misrepresentation
Finding differences between what was guaranteed during the discussion with your advisor / agent and what is stated in the policy / contract documents can be worrying. Giving a false representation damages the trust in your insurance / Takaful provider, validating the choice to cancel and look for a more open option.
 
How to Cancel Your Insurance Policy / Takaful Contract?
If you've chosen to cancel your insurance / Takaful plan, here is a simple guide to assist you with the procedure:

1. Provide Written Notice
Inform your insurance / Takaful provider in writing of your choice to cancel the plan within the specified free look period. This stage guarantees that your request to cancel is accurately recorded and handled by the insurance / Takaful company.

Receive Refund Upon Cancellation
If you choose to cancel your insurance / Takaful plan during the free look period, the refund process is straightforward yet varies depending on the type of product you hold.

For investment-linked plans (ILPs), the refund typically includes the account value plus any policy or contract charges, with deductions for any medical expenses incurred. In contrast, for non-ILP products, the refund will generally consist of the premiums or contributions you have paid, again less any medical expenses incurred.

While most insurance / Takaful providers offer a penalty-free cancellation during the free look period, some may deduct additional charges. As plans can differ between providers, it's essential to review the specific terms of your policy to understand the exact refund process and any potential deductions.
 
Cancellation Processes in Insurance / Takaful Plans: Knowing the Difference
Cancelling a conventional insurance policy typically involves providing written notice within the free look period, reviewing the terms for coverage used, and acknowledging any administrative costs. The process reflects the risk transfer principle, where the insurer may adjust the refund based on the time the policy was active and the coverage provided.

On the other hand, Takaful plan cancellations are guided by shared risk and mutual cooperation. Participants must provide written notice and may see deductions for administrative fees and medical expenses from their contributions. This aligns with the Takaful principle of collective responsibility and equitable distribution of funds among all participants.

Maximise the Free Look Period in Insurance / Takaful
In the complex realm of insurance / Takaful, the free look period stands out as a source of empowerment, allowing policy / contract owners the chance to evaluate, reconsider, and adjust their insurance / Takaful choices carefully. With knowledge and clarity, one can confidently examine plan specifics, assess coverage sufficiency, and weigh their choices without worrying about making a decision. The free look period allows consumers to stay in control of their financial decisions by reviewing details and considering plan cancellation, ensuring they have the necessary tools to make choices that align with their personal needs and goals.

Ready to embark on a path towards financial security, stability, and tranquillity? Explore Sun Life Malaysia's range of award-winning insurance and Takaful solutions designed to address your specific needs. As a reliable companion in protecting your financial health and what matters most to you, we are dedicated to offering individualised assistance and advice. Experience the best of both worlds with us – your trusted insurance and Takaful partner, offering innovative solutions for a financially-fit future with Sun Life Malaysia!