Rhode Island Life Insurance Practice Exam

What happens if a policy is not delivered within the specified time frame after issue?

1. The coverage is nullified

2. The policy is automatically canceled

3. The policyowner has no claim rights

4. The policy remains valid under free-look conditions

The correct answer is: The policy remains valid under free-look conditions

When a life insurance policy is issued, there is typically a free-look period provided to the policyholder. This allows the policyowner to review the terms and provisions of the policy after delivery. If the policy is not delivered within the specified time frame, the coverage may still remain valid under the free-look provisions granted by the insurer. This means that even if there is a delay in delivery, the policyowner still retains the right to examine the policy and decide whether to continue with it or return it for a full refund. This ensures that the policyholder has the opportunity to make an informed decision without the risk of losing coverage simply due to administrative delays in delivery. Other options suggest more severe consequences, such as nullification of coverage or cancellation of the policy, which are not typically the case as insurance companies often prioritize consumer rights and allow the policyholder to retain the coverage during the free-look period.