how free look periods work
insurance policies are legal contracts that grant rights and responsibilities to both the insurer and policyholder 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 and state law during the free look period sometimes known as the free examination period the purchaser can continue to ask the insurer questions regarding the contract to better understand the policy if refunded the amount given back may equate to the value of the account at cancellation or the number of payments depending on the state in which the policy was written the free look period is for the benefit of a policyholder it provides additional time to review a new contract in depth 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 if you decide to cancel the policy you must notify your agent or company representative history of the free look periodthe u s 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 the industry has vastly improved since those days the negative reputation of the past forced the industry to reform its practices state governments became involved with complaints about abusive sales strategies responding with legislation which is one reason free look periods exist example of the free look periodlet s say you live in texas and buy a variable life insurance policy two days after signing up you receive your executed policy documents in the mail your free look period begins when your receive those documents in texas you have 10 to 20 days to review the policy and decide whether you want to keep it two days later you brings your policy to your lawyer to review and you re advised to cancel the policy and go with another insurer instead you take your lawyer s advice and advise your insurer the next day that you want to cancel the policy the insurer is obliged under law to comply and you will be refunded your initial premium payment 