Free Look Period in Life Insurance

What Is the Free Look Period in Life Insurance?

The free look period in life insurance policy is a trial period insurance companies offer to new policyholders. It gives you an opportunity to review the policy and ensure it aligns with your goals and current financial situation.

If you feel the policy isn’t a good fit, you may cancel it without any charges and get a full refund of any payments you have made. The free look period is important, as cancelling your life insurance coverage later could incur fees and penalties, including cancellation charges, loss of coverage, and no premium refunds.

A free look window is offered at the beginning of the policy after you get your policy documents. The period may last from 10 to 30 days and varies based on state law and life insurance policy type. While most refunds are issued in full, some insurers may deduct small amounts for pro-rata risk premiums, medical exam costs, or administrative fees.

How the Free Look Period Works

The free look period is a penalty-free period after getting a new life insurance policy, where you can read the policy documents and confirm if the terms align with the final quote and your life goals. Based on the review, you can keep or cancel the policy.

Here’s a quick look at how it works:

• You apply for a life insurance policy and receive a quote from the insurance company that outlines your coverage details and your premium payments.
• When you agree to the quote, your coverage begins with the first premium payment. Your policy is active.
• After the first premium payment you receive the policy documents with a free look period of 10-30 days, for most states.
• During this period you can double-check all the details, premium payment schedule, coverage offered, payment tenure, rider, and exclusions.
• You can also compare your policy’s terms with other life insurance quotes.
• It’s your choice to keep or cancel the policy.
• If you cancel the policy, the insurer may initiate a full refund without any major deductions or penalties.

When the Free Look Period Starts

Typically, the free look period for your life insurance policy starts after you receive the policy documents, not when you apply for a policy or make your first premium payment.

For clarity, check those dates with the insurer. The ‘received’ date can vary by insurer, whether the day it’s emailed, mailed, or physically delivered. Confirm the exact start date so you know when your free look period ends.

Read: Term Life Insurance with Living Benefits

Your Options During the Free Look Period

During the free look period in a life insurance policy, you have a ‘free’ choice to keep or cancel the policy, without any questions asked. Here’s how you can move forward with some options:

Reviewing and Comparing Your Policy

To ensure that you made the right policy choice, here are a few things to confirm:

• If the death benefit is sufficient for your loved ones
• If the premium is manageable based on your current income
• If the riders you chose are included in your policy
• What the policy exclusions are, and if they are acceptable
• If a term policy, if the term length is long enough to cover major life goals
• If there are higher coverage options available at a similar premium cost

Canceling for a Refund

If you are not satisfied with what your policy offers, you can cancel the policy. If you want to cancel, you should notify the insurer within the free-look window to avoid paying any penalty and help ensure an on-time premium refund. Post cancellation, keep copies of everything handy: the cancellation request, acknowledgement from the insurer, policy number, and refund details.

If you miss that window, you can still cancel later, but you may lose part or all of your premiums and could face surrender charges.

Common Reasons to Cancel a Policy During the Free Look Period

Some of the common reasons to cancel a policy during the free look period are:

• If the coverage amount is not enough to provide for your loved ones after your death
• If the premium costs are higher and difficult to sustain due to limited income
• If you opted for term life insurance but wanted lifetime coverage
• If you received more favorable life insurance offers from other insurance companies

Read: Why Get Life Insurance

How Long Is the Free Look Period?

The free look period on life insurance typically lasts up to 30 days but may vary based on the state laws, insurance company, and policy type.

What Happens After the Free Look Period Ends

After the free look period in life insurance ends, your policy remains in force based on your choice of keeping or cancelling it. If you keep the policy active, it stays active as long as you keep paying premiums. If you cancel the policy, your premium amounts are refunded and your coverage ends.

Can I Cancel My Policy After the Free Look Period?

Yes, you can cancel the policy after the free look period of your life insurance ends. But it comes with certain limitations:

• You won’t receive any refund of premiums already paid.
• If you own a permanent life insurance policy, surrender charges are applicable.
• Your coverage ends even with the premiums you have paid.

Read: Level Premium Term Life Insurance Policies

Why the Free Look Period Matters

Here are a few reasons why the free look period for life insurance matters:

• You can make the right policy choice without any sales pressure.
• You have enough time to reflect on your coverage needs and life goals.
• Saves you from a long-term commitment if the premiums are too costly to handle
• Lets you switch to a better offer from another insurance company