Arkansas Life and Health Insurance Practice Exam

What is the purpose of a free-look period in an insurance policy?

1. Allows the insured to modify the policy

2. Allows the insured to cancel the policy for a refund

3. Allows the insured to lower the premiums

4. Allows the insured to transfer the policy

The correct answer is: Allows the insured to modify the policy

The purpose of a free-look period in an insurance policy is to allow the insured to review the policy after purchase and make changes if needed without any financial penalties. This period typically ranges from 10 to 30 days after the policy is issued. During this time, the insured can modify the policy, including making adjustments to coverage amounts or riders, or even cancel the policy for a full refund if they are not satisfied with the terms or coverage provided. This ensures that the policyholder has sufficient time to consider their decision and make any necessary adjustments without being locked into a policy that may not meet their needs.