Final answer:
The correct answer is C. Provide a replacement policy, as when a policy is returned during the free look period, the company must refund the premium and cancel the policy without the obligation to offer a replacement or notify the department.
Step-by-step explanation:
When a new policy is returned under the free look provision, a company is required to do all of the following, EXCEPT:
A. Refund the premium
B. Cancel the policy
C. Provide a replacement policy
D. Notify the insurance department
The correct answer is C. Provide a replacement policy. When a policy is returned during the free look period, the insurance company must refund the full premium paid and cancel the policy. There is no requirement for the company to offer a replacement policy or to notify the insurance department about an individual policy cancellation. The free look period allows policyholders to reconsider their decision within a specified timeframe after the policy is issued without financial penalty.