Maryland Life and Health Insurance License Practice Exam

What does the free-look provision in an insurance policy provide the policyowner?

1. The option to waive the next premium

2. The right to modify coverage

3. The right to return the policy for a full refund

4. The ability to borrow against the policy

The correct answer is: The right to return the policy for a full refund

The free-look provision in an insurance policy provides the policyowner the opportunity to review their policy and decide whether to keep it or return it for a full refund. This provision is a consumer protection feature designed to give policyholders a specified period, usually 10 to 30 days, to examine the policy and ensure it meets their needs. During this time, the policyholder can assess the terms, conditions, and coverage details without risk. If the policyholder finds that the policy is not what they expected or doesn't fulfill their needs, they can return it and receive a complete refund of any premiums paid. This option does not involve modifying the policy, waiving premiums, or borrowing against the policy, which are separate aspects of insurance contracts. Instead, the free-look provision specifically guarantees the policyholder the right to cancel their contract within a set timeframe, ensuring they feel confident about their purchase.