- Free-look period allows cancelling new policies
- June 15, 2015
Once the underwriting process has been completed, your insurance company will send you a hard copy of your policy detailing every aspect and provision.
But what happens if you change your mind and want to cancel the policy?
Fortunately, it is required by law to have a period of time called the “free-look” period where consumers can cancel their new policy and get a full refund. The period of time usually ranges from ten to 30 days with ten days being the norm.
This law applies to both life insurance and annuity contracts. It may also cover replacement life – new life insurance policy that has been purchased to replace an existing one – depending on your state of residence.
For example, Georgia law gives consumers ten days to decide while Colorado law gives consumers 15 days for life insurance and 30 days for replacement life.
Some states offer a “free-look” period for health insurance and long term care insurance as well. It just depends on your state of residence, which makes contacting your state’s department of insurance for information a vital step.
If you are curious on your state’s “free-look” laws, visit the National Association of Insurance Commissioners website. They provide a service where you can locate the commissioner in your state, their contact information and a link to your state’s department of insurance website.
It is wise to do your research beforehand to avoid any complications in the future.
Industry experts recommend having an attorney review your new policy during the “free-look” period to ensure everything is safe and sound, as it is always a good idea to get a second opinion.
This period generally begins once you have received a full policy back from the insurer.
Other than seeking out an attorney, consumers should follow up with their insurance agent and/or insurance company to ask any additional questions before the policy becomes official.
This is especially important for those who purchased a whole life policy as they have more at stake if something were to happen. With term life insurance, you can back out of your policy at any time without facing a penalty. The same cannot be said about whole life insurance as penalties could run into hundreds of dollars.
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