LLQP Life Insurance · Component 3.3 · 25% of the exam
Under the free-look (rescission) right, if the client returns the policy within the period:
- AA cancellation fee applies, since the insurer must recover the cost of issuing a policy that the client has rejected
- BThe policy converts to term for the balance of the year, so the client is covered until the premium already paid runs out
- The contract is treated as never having taken effect and all premiums paid are refunded in full
- DHalf the premium is refunded, with the balance retained by the insurer for the coverage provided during the period
Correct answer: C) The contract is treated as never having taken effect and all premiums paid are refunded in full
The free look is a statutory or contractual consumer right. Cancellation within it is without penalty. The agent notes the delivery date so the period can be measured.
Why the other options are wrong
- ANo fee applies during the free look.
- BNo conversion occurs.
- DThe refund is full; nothing is deducted.
Exam tip
Free look = full refund, no questions. Record the delivery date.
Common mistake
Discouraging a client from exercising the free look.
What this tests
CISRO competency component 3.3 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.