Free Look Period

It can terminate the policy without any penalties, such as surrender charges. A free look period often lasts 10 or more days depending on the insurer. During the free look period, the policy holder can decide whether or not to keep the insurance policy; if they are not satisfied and wish to cancel, the policy purchaser can receive a full refund. The free look period is for the benefit of a policyholder and is most commonly associated with life insurance policies. It provides additional time to review a new life insurance policy in depth.

Insurance policies are legal contracts that grant rights and responsibilities to both the insurer and policyholder. Policyholders might also ask their agent, lawyer, or company representative to review their policy's terms and conditions. Once a policyholder is in receipt of a new life insurance policy, the free look period begins. It provides additional time to review a new life insurance policy in depth. 

During the free look period, sometimes known as the free examination period, the purchaser can continue to ask the insurer questions regarding the policy details as a way of better understanding the policy. If you are not satisfied with the terms and conditions of the policy you have purchased, you can cancel and return the policy within a specified period after receiving it, and your premiums will be fully refunded. The time frame will vary depending on your insurer. Also, Laws vary by the state in which the policy was written.

The U.S. The life insurance industry was once very poorly regulated and rife with scams. Back in the 1930s and 1940s, the industry tended to attract unscrupulous characters. Much of the life insurance industry got a bad reputation because of high-pressure tactics, badgering of customers, and many disreputable, insolvent, or nonexistent insurance companies that never paid claims.

Luckily, the industry has vastly improved since those days. The negative reputation of the past forced the industry to reform its practices. State governments also got heavily involved with complaints about abusive sales strategies. They also responded with legislation and regulation; this is one of the reasons the free look period came into existence.

Let's say that Sam, who lives in Texas, buys a variable life insurance policy from their local insurance agent. After signing up for the policy, Sam receives their executed policy documents in the mail two days later. Sam's free look period begins when they receive those documents. In Texas, they have 10 days to review the policy and decide whether they want to keep it.

Two days later, Sam brings their policy to their lawyer to review, and their lawyer advises them to cancel the policy and go with another insurer instead. Sam takes their lawyer's advice and advises their insurer the next day that they want to cancel the policy. The insurer is obliged under law to comply with their wishes, and the insurer refunds Sam's initial premium payment.