Arkansas Life and Health Insurance Practice Exam

Which of the following is true regarding the free-look provision in life insurance policies?

1. Allows the policyholder to change beneficiaries without fees

2. Allows the policyholder to review the policy for a set period with the right to return it for a refund

3. Provides a grace period for late premium payments

4. Waives the waiting period for pre-existing conditions

The correct answer is: Allows the policyholder to change beneficiaries without fees

The correct answer is B. The free-look provision in life insurance policies allows the policyholder to review the policy for a specific period, usually 10 to 30 days, after receiving it. During this time, the policyholder has the right to cancel the policy for a full refund if they are not satisfied with its terms and conditions. This provision offers a safeguard for the policyholder to ensure they are making an informed decision without facing financial penalties. Option A is incorrect because the free-look provision does not specifically relate to changing beneficiaries without fees. Option C is incorrect as it refers to the grace period for premium payments, which is a separate provision in insurance policies. Option D is incorrect as the free-look provision is not related to waiving waiting periods for pre-existing conditions.