Rhode Island Life Insurance Practice Exam

What can happen if a policy is returned after the free-look period?

1. The premium is partially refunded

2. No refund is provided

3. The policy is adjusted for coverage duration

4. A new policy must be issued

The correct answer is: No refund is provided

When a policyholder returns a life insurance policy after the free-look period has expired, the insurance company typically does not provide any refund of the premium paid for that policy. The free-look period is a specified timeframe, usually 10 to 30 days, during which a new policyholder can review the policy and cancel it without penalty. If the policy is not canceled during this initial period, it becomes binding, and the coverage continues. Returning the policy after this grace period indicates a change of heart or dissatisfaction with the chosen coverage, but since the rights associated with the free-look period have lapsed, the insurer retains the premium as part of the contractual agreement. Most policies offer no further options or adjustments in this scenario, which is why the option stating that no refund is provided accurately reflects the standard practice in the insurance industry.