Free look period

Free look period

  • May 19, 2022
Mr John was advised to buy a life insurance policy, he visited an insurance company and was given terms and conditions. Few days later,Mr John lost his job,  not knowing if he could fulfill the terms of agreement he decided to cancel his policy. Thankfully He was given a free look period to make up his mind to either keep or cancel the policy.

What is free look period

Free look period is the time frame usually 10-30 days given by the insurer when a life insurance policyholder can decide to cancel their policy without penalty and also receive full refund of their already paid  Premium.

During the free look period you can have a mind change and cancel the policy, But if  you decide to keep the contract then you can continue paying the agreed premium in the contract 

 What is the time frame for free look period

Usually the minimum time frame for most states is 10 days but it can also stretch to as much as 30 days. This time frame depends on the insurance provider and it differs from insurer to insurer.

The beginning of the free look period also differs from insurer to insurer. Some insurance providers start their free look period on the day you buy the insurance or the day you receive your policy document. Check with your insurance provider to confirm when yours begins.

How free look period works

Basically, an insurance policy is a legal contract which gives responsibility and rights to both the policyholder and the insurance provider. As a customer, if you feel you can not comply with the terms of agreement you can cancel the contract, but this must be done within a pre agreed time frame and receive full refund of your premiums.

As a policy holder, you can ask your insurance provider questions to fully understand the terms of the agreement and also check if it aligns with your needs and capability.

The policyholder is actually at an advantage during this time as it gives extra time to review the contract and see things that must have escaped scrutiny at first.

Why was free look period created

During the era of the great depression (1930’s-1940’s) the insurance industry was filled with corruption and scam. People refrained from patronizing because of the ways they conducted their business ( harassing of customers, pressurizing tactics of getting customers ) and some are non-existent or refuse to pay claims.

These bad reputation of the insurance  and complaints of the people got to the government, who got seriously involved  and reform it’s practices. They also introduced new terms of contract, one of which is the free look period.

Cancelling your policy

There are different ways to cancel your life insurance policy for the two types of life insurance. For term life insurance you can cancel at any time by not paying your premium, there won’t be any penalty attached, although, you would not be receiving any refund, but if you cancel within the free period, you can get a refund.

For whole life insurance, you can contact your insurance provider to cancel your policy within the free period time frame given and get your full refund of premiums already paid, but if you cancel after the free period, you would have to pay a penalty.

Keeping your policy

If after reviewing your policy you decide to retain it, you can continue paying to keep it running. If you feel the cost of the policy is too high you can apply for rate reconsideration. Contact your insurance agent to know what is best for you.

Conclusion

It is advised to make a beneficial resolution when you want to purchase life insurance policy. If you don’t feel convinced by your insurer and coverage, the free look period allows you to cancel your policy before you’re locked in for the long term.

Previous Post

cyber insurance
Next Post