What is the purpose of a free-look period in an insurance policy?

New York Insurance Exam

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Question 1 of 5.

A. To allow the insurer to cancel the policy

B. To allow the policyholder to review and return the policy

C. To waive the first premium payment

D. To extend the grace period

Explanation: The free-look period, typically 10-30 days, allows the policyholder to review the policy and return it for a full refund if they are not satisfied.

Question 2 of 5.

What is the primary purpose of life insurance?

A. To provide financial support to beneficiaries upon the insured's death

B. To serve as an investment vehicle for retirement

C. To cover medical expenses during hospitalization

D. To provide a tax-free savings account

Explanation: Life insurance is designed to offer financial security to dependents or beneficiaries by paying a death benefit upon the insured's passing, helping to replace lost income or cover expenses.

Question 3 of 5.

Which type of insurance policy provides coverage for a specified term?

A. Whole life insurance

B. Universal life insurance

C. Term life insurance

D. Variable life insurance

Explanation: Term life insurance provides coverage for a specific period, such as 10 or 20 years, and pays a death benefit only if the insured dies during that term.

Question 4 of 5.

What is an agent's responsibility regarding policy illustrations?

A. To guarantee the illustrated returns

B. To ensure illustrations are accurate and comply with regulations

C. To use illustrations as the sole basis for policy sales

D. To avoid showing illustrations to clients

Explanation: Agents must provide accurate policy illustrations that comply with state regulations and clearly explain that projections are not guaranteed.

Question 5 of 5.

Which of the following is a characteristic of group health insurance?

A. It covers only individuals

B. It is typically more expensive than individual plans

C. It is often provided through an employer

D. It requires individual underwriting for each member

Explanation: Group health insurance is commonly offered through employers, covering a group of people under a single policy, often at a lower cost due to risk pooling.