Understanding the Term Life Insurance "Free Look" Period
When you buy a life insurance policy, you generally have what is called a Free Look Period.
During this time, you have the option of canceling your insurance policy without any penalty. Depending on the insurance carrier and the state in which you reside, the free look period can be 10 days or even longer, usually up to 30 days.
However, the duration of your free look period by state of residence varies from 10, 14, 25, 20 or 30 days in most states.
The free look period is to your benefit, as it gives you some additional time to review your insurance policy and have your insurance agent, company representative, or attorney review your policy's terms, conditions and exclusions with you.
It also allows you a reasonable period of time during which to cancel your life insurance with a full refund of all premiums paid to date.
From the time you, the policy holder, are in receipt of your insurance policy, the free look period begins. If you decide that you need to cancel your policy, you must notify your agent or insurance company representative with your request to cancel your coverage.
Because the purchase of a life insurance policy is an important decision for both you and your family, you need to be sure that the policy you receive is going to meet your insurance needs to provide financial security for your loved ones.
Make sure you take the time to read your new policy carefully, and ask your insurance agent to explain anything that you don't fully understand.
The free look period is in place so that you can take the time to be certain about your decision and cancel your policy, if desired, without being penalized (losing any money).
What is a Free Look for Life Insurance?
Almost all state insurance departments require life insurance companies to provide each insured person with a "free-look" period after you have purchased your life insurance policy.
Usually, the company provides a 10-day period (up to 30 days) for you to cancel your policy and get a full-refund of all premiums paid based on your policy terms, or the law in your state.
You can take this time to review your life insurance policy, ask your life insurance agent any questions you have about your policy, and decide whether the life insurance policy you purchased is right for you and your family.
Several insurance companies offer you up to a 30-day Free Look period.
This allows you to review your new policy for 30 days before deciding to keep the coverage. If you do not want to continue your insurance policy for any reason, you can return it for a full refund of all premiums paid.
A free look period often lasts 10 or more days (depending on the life insurer), allowing the policy holder to decide whether or not to keep the insurance policy; if they are not satisfied and wish to cancel their coverage, the policy purchaser can receive a full refund of premiums paid.
When Does the Free Look Period Begin?
The free-look period on life insurance begins the day you receive the policy.
Make sure you keep the envelope containing the policy documents as it will have the date of delivery to prove when you first received your policy. Also, before you sign on the receipt of your policy, check the date.
How Long Does the Free Look Last for Life Insurance?
The free look period is a required period of time (varies by state), typically 10 to 30 days, in which a new life insurance policy owner can terminate the policy without any monetary penalty, such as surrender charges.
Key Takeaways About Free Look Periods
How Long is the Free Look Period?
The length of the free look period varies depending on your state and your life insurance company.
Every state insurance department mandates a free look provision of at least 10 days in life insurance contracts, though many require an even longer free look period.
When Does the Free Look Period Start?
Additionally, your life insurance contract may include a free look provision longer than the minimum state requirement.
When the free look period begins also varies by insurer. It can start on the day your policy is in force, the day you receive the policy paperwork, or the day your insurance company sends your policy by mail or electronically.
Check your policy or ask your insurance agent to confirm when your policy’s free look period begins and ends.
When you buy a new life insurance policy, the policy contract will include information about the free look period, a specific window during which you can cancel your policy without penalty and receive a refund of your premiums.
This period usually ends after 30 days, though some insurers have a shorter free look period of 10 days. The specific details of your policy’s free look provision can be found in your policy contract.
The free look period allows you to change your mind for any reason — if you no longer need your policy or decide you want to buy coverage from a different life insurance company, for example.
To cancel your life insurance during the free look period, you will need to contact your insurer. If you decide to keep your life insurance coverage, then continue to pay your premiums as normal.
Key Takeaways
Free look periods vary in length depending on state regulations and your insurer, but are typically 10-30 days.
During the free look period, your initial policy premiums are refunded if you cancel your coverage and you won’t be charged a surrender fee.
In Force
When the premium for an insurance policy has been paid and the policyholder is receiving insurance coverage, the day you receive the policy paperwork, or the day your insurance company sends your policy by mail or electronically.
Check your insurance policy or ask your insurance agent to confirm when your policy’s free look period begins and ends.
You can cancel for any reason.
Some people cancel because a new employer provides them with coverage or because their financial needs have changed.
Once you’ve done your research, you have two main options:
Cancel Your Life Insurance Policy
If you have a term life insurance policy, you can cancel your coverage by discontinuing your premium payments. If you stop paying your premiums, your life insurance policy will be cancelled by the insurance company.
But, if you’re canceling within the free look period or want your premiums refunded, you’ll need to call your insurer.
If you decide to cancel after the free look period ends, you won’t be penalized, but you won’t get any premiums back, either.
Keep Your Life Insurance Policy
If you like your policy as is, all you have to do is continue paying your premiums on time to keep the policy in force.
But if you find that your policy is too expensive, you may be able to make some adjustments after you’ve had it for a year or more.
For example, you can apply for a rate reconsideration if you’ve maintained health or lifestyle improvements that would lower your premiums; such as, quitting smoking, or lowering your weight or cholesterol level.
What Happens After the Free Look Period
After your policy’s free look period has ended, you can still cancel your coverage, but you won’t be refunded any premiums.
The only instance where an insurer will refund your premiums is if you prepaid them.
For example, if you opted for annual payments as opposed to monthly payments, you will be refunded for the remaining months that you no longer have life insurance coverage.
It’s important to make the right decision when buying life insurance.
If you don’t feel confident in your insurer and your coverage, the free look period allows you to cancel your policy before you’re locked in to your policy for the long term.
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