Question

Q applied for life insurance and submitted the initial premium on January 1. Policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

a) Refund the premium to Q
b) Keep the premium and issue a new policy
c) Continue coverage as originally agreed
d) Cancel the policy and assess a penalty

Answer 1

The insurer will cancel the policy and may assess a penalty if the policy is returned within the free-look period.

Step-by-step explanation:

The insurer will cancel the policy and may assess a penalty. In this situation, Q returned the policy within the 'free-look' period, which is a certain number of days after receiving the policy during which the policyholder can review the terms and conditions and decide whether to keep it or cancel it without any penalty. The specific number of days for the free-look period may vary depending on the insurance company and policy terms.

The penalty assessed by the insurer could be a deduction from the initial premium paid by Q. It is important for policyholders to be aware of the terms and conditions stated in the policy document, including the free-look period and any penalty provisions. If Q has any concerns or disputes regarding the penalty or cancellation process, they should reach out to the insurer's customer service or claims department to discuss the matter further.