What is the free look period?
The free look period (also called the free examination period) is a short, legally required window after you receive a new life insurance policy (or some annuity contracts) during which you can cancel the contract without penalty and receive a full refund of premiums paid. It gives purchasers time to review the contract, ask questions, and decide whether to keep the policy.
Key takeaways
– The free look period usually begins when you receive the policy documents (the “delivery” date), not necessarily the date you applied or signed.
– Lengths vary by state and product; common periods are 10 days, but some states or products provide 20 or 30 days.
– If you cancel within the free look period you generally get a full refund of premiums; outside that period cancellations usually trigger surrender charges, loss of premiums, or other consequences.
– Free look provisions exist to protect consumers after a history of abusive sales practices in the industry. (See state insurance departments and federal guidance.)
How free look periods work
– Trigger: The free look period normally starts the day you receive the policy contract or the insurer’s official delivery date. Check your policy or ask the insurer which date they consider the start.
– Refund method: If you return the policy during the free look, the insurer typically refunds your premium in full. Policies differ on whether the refund is gross premium or net of certain costs; state law may govern specifics.
– Scope: Most common for life insurance and annuities, but not every insurance product has the same rules. Variable life, variable annuities and replacement policies sometimes have specific or longer look periods.
– State variation: States set minimums and rules—e.g., Texas requires a free look period of at least 10–20 days depending on the product. Always check your state’s department of insurance rules.
History and why it exists
In the 1930s–1940s the U.S. life insurance marketplace had widespread abuses—high-pressure sales, misrepresentation, and insolvent companies. Consumer complaints prompted states to regulate life insurance more vigorously and to add consumer protections, including the free look period, so buyers have time to reconsider purchases made under pressure or without full understanding.
Typical lengths and a 30-day free look period
– Typical: Many states set a minimum of 10 days.
– 30-day example: If your policy has a 30-day free look, you have 30 calendar days from the delivery date to cancel for a full refund. Whether a specific policy offers 30 days depends on the insurer and state law. Always confirm the exact number in the policy contract or state insurance rules.
Example
You live in Texas and buy a variable life policy. Two days after signing you receive the executed contract—the free look period starts. Texas gives 10–20 days (depending on the product), so you have that window to seek advice and, if you decide against the policy, return it for a refund. You notify the insurer within the window and receive your premium back.
Can you cancel a life insurance policy at any time?
Yes—you can cancel (surrender) a life insurance policy at any time. However:
– After the free look period ends, you generally will not get a complete premium refund.
– For permanent policies with cash value, you may receive the cash surrender value minus surrender charges and any outstanding loans.
– Canceling a term policy after the free look period typically means you simply stop paying premiums, but you won’t get those premiums back.
– Tax consequences may apply if you surrender a policy with gains. Consult a tax advisor.
Can you cancel a life insurance policy online?
Often yes. Many insurers let policyowners request cancellation online, by phone, or by mail. Requirements vary:
– Some insurers require a signed form or return of the original policy documents (an LPR—lost policy release—may be needed if originals are lost).
– For a free look cancellation you should still get written confirmation and documentation of the refund.
When does the free look period begin?
Usually the period begins the day the policy is delivered to you (physical receipt or acknowledged electronic delivery). Insurers’ definitions of delivery can differ—confirm with the company. If you purchased through an agent and did not receive the contract right away, the look period typically starts when you receive the policy paperwork.
Practical steps — canceling within the free look period (recommended workflow)
1. Read the policy immediately: Identify the free look length, delivery date, effective date, policy number, and any stated cancellation instructions.
2. Ask questions: Contact your agent or insurer with any questions (coverage, exclusions, beneficiaries, cost). Get important answers in writing if possible.
3. Consult advisors if needed: Attorney, financial planner or independent insurance advisor for contract review, especially with complex products (variable/universal life, annuities).
4. Prepare cancellation notice: Include your name, policy number, effective date, date you received the policy (if known), statement that you are cancelling under the free look period, and request for full refund.
5. Send cancellation in writing: Use the insurer’s preferred method (email, online form, registered mail, fax). Keep proof of delivery (return receipt or delivery confirmation).
6. Return documents if required: Some insurers request the original policy be mailed back. Follow their instructions.
7. Get written confirmation and refund: Obtain confirmation that the policy is voided and the refund amount and timing. Verify receipt of funds.
8. If problems arise, escalate: If the insurer refuses to honor a valid free look cancellation, contact your state department of insurance for assistance.
Practical steps — cancelling after the free look period
1. Request the insurer’s surrender or cancellation form.
2. Understand financial consequences: Ask for a payoff/surrender statement that shows surrender charges, cash value, loan balance, and net amount you’ll receive.
3. Consider alternatives: Reduced paid-up insurance, extended term, or loan may be preferable to surrender in some cases.
4. Tax review: Check for taxable gains if cash value exceeds premiums paid. Consult a tax professional.
5. Complete required signatures and return documents. Obtain written confirmation of surrender and payment.
Sample cancellation language (short)
– “Please accept this as notice that I elect to cancel policy # [policy number] under the free look provision. I received the policy on [date]. Please confirm cancellation in writing and refund the premium paid to [payment method/address].”
Common issues and how to avoid them
– Confusing delivery date: Ask the insurer what they consider the delivery date if the timing matters.
– Replacement secrecy: If you replace an old policy, special replacement rules apply and you may get an extended look period—ask your agent and read replacement disclosure forms.
– Variable products complexity: Variable life and annuities may have special free look rules and investment-account consequences—get professional advice.
– Missing refund: Keep proof of your cancellation request and, if needed, file a complaint with your state insurance department.
Fast facts
– Free look periods were created largely because of past consumer abuses in life insurance sales.
– The period’s length and exact rules vary by state and by product.
– If you die during the free look period, treatment depends on state law and the contract; check your policy and state rules for the applicable treatment of death claims during that period.
The bottom line
The free look period is a consumer protection that lets you cancel a new life insurance policy (or some annuity contracts) within a short timeframe and receive a full refund. Always check the policy’s free look length, know when it starts, read the contract carefully, keep written records of communications, and act promptly if you decide you want to cancel.
Sources and further reading
– Investopedia, “Free Look Period.”
– U.S. Securities and Exchange Commission, “Free Look Periods.”
– Texas Department of Insurance, “Life Insurance Guide.”
– Progressive Insurance, “What Is a Free Look Period?”
If you’d like, I can:
– Draft a cancellation letter or email tailored to your insurer and state, or
– Look up the free look rules for your state (give me the state and product type).