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How to Use Free Look Period in Mutual Fund Schemes?

The credit for this input goes to my dear friend Krish Nair who has physically undergone the trauma of being missold a mutual fund policy with assurances of 12% returns.

Background to Misselling of Policy

The marketing executives of a company landed at his home post phone call and assured him of 12% returns. He asked for written guidelines and those friends assured him that it will be sent in email. After a lot of push and pull he failed to get written assurance and was told that it will be given in the mutual fund document. Meanwhile the cheque issued with policy had been also encashed.

Now the ordeal commenced on receipt of the document that no where 12% guideline is given. He was left fuming and his marketing friends even stopped answering the calls. Later on a divine light struck him when another marketing executive of a different hearing his plight advised him to go for free look period exercise option.

Free Look Period

To make it simple you can consider it as a 15 days period from the date you have received mutual fund documents through courier as courier receipt date gets embedded in mutual fund company database. Now with in these 15 days you have an option to return the policy and ask for a refund of the cheque deposited.

How to execute the Free Look Period for surrender of policy?

Our friend visited the office of the company and told them that he wanted to surrender the policy in free look period. He was asked to wait as their manager was out but it was infact time being used to call those marketing guys who sold policy to reach spot and convince the client not to surrender the policy. The lady executive even started crying citing that their job will be at stake.

Within 20 mins these smart marketing gentleman and a lady appeared on scene and tried to convince him not to surrender policy but our friend was adamant because he knew that even if he left the policy and did not pay any other premium his money is locked for 5 years and he will get lesser amount what he had paid at end of 5 years due to multiple charges being levied on his policy for non maintenance.

Now manager emerges on scene and scolds the marketing executives for misselling the policy and  treats our friend to a free party of snacks but was not able to convince him and finally policy was surrendered for which he got receipt and got cheque for the amount in 10 days. The important catch is that you must get receipt for surrender with date.

Verdict

  • Check the fine print before signing on the dotted line.
  • Any policy offering more than market returns needs to be seen with an eye of suspicion.

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