Texas General Lines — Life, Accident, Health and HMOLife InsuranceEasy
Which of the following statements BEST describes the 'Free-Look Provision' in a life insurance policy?
- AIt guarantees that the policy will not lapse for a certain period even if premiums are not paid.
- BIt allows the policyowner to make changes to the beneficiary designation without charge.
- CIt permits the policyowner to review the policy for a specified period and return it for a full refund of premiums.
- DIt waives the premium payment if the insured becomes totally disabled.
Show answer & explanationAnswer & explanation
Correct answer: C. It permits the policyowner to review the policy for a specified period and return it for a full refund of premiums.
The Free-Look Provision, also known as the Right to Examine, gives the policyowner a specified period (usually 10 days, but can be longer for replacement policies) to review the policy. If they are not satisfied, they can return it for a full refund of all premiums paid.
Why the other options are wrong
- A. This describes an Automatic Premium Loan provision or a Grace Period, not the Free-Look Provision.
- B. This describes a policy service feature, not the Free-Look Provision.
- D. This describes the Waiver of Premium rider, not the Free-Look Provision.
Free-Look Provision
A life insurance policy provision that grants the policyowner a specific period (e.g., 10 days) to review the policy and return it for a full refund if dissatisfied.
- Right to examine period.
- Full refund of premiums.
- Starts upon policy delivery.
Memory trick: Free-Look: Look it over, get your money back.