California Life-Only & Accident and Health AgentCalifornia Law - Life and Accident & HealthMedium
A life insurance policy provides a 'free look' period. If a policyowner returns the policy during this period, what is the insurer legally obligated to refund?
- AThe cash value of the policy, if any, accrued during the free look period.
- BOnly the first month's premium, less any administrative fees.
- CThe entire premium paid, without any deductions.
- DThe premium paid, minus the cost of coverage for the period the policy was in force.
Show answer & explanationAnswer & explanation
Correct answer: C. The entire premium paid, without any deductions.
California law requires a minimum 10-day free look period for life insurance policies. If the policy is returned during this period, the insurer must refund the entire premium paid, no questions asked and without any deductions, as if the policy was never issued.
Why the other options are wrong
- A. Cash value typically does not accrue during such a short initial period, and even if it did, the full premium refund is the requirement.
- B. Deductions or partial refunds are not allowed during the free look period.
- D. Deductions for coverage cost are not permitted during the free look period.
Life Insurance Free Look (CA)
In California, life insurance policies must offer a minimum 10-day 'free look' period, during which the policyowner can return the policy for a full refund of all premiums paid.
- Minimum 10 days (could be longer for specific policies, e.g., 30 days for seniors).
- Starts upon policy delivery.
- Full premium refund, no deductions.
Memory trick: Free look, free return, full refund.