Consumers Should Evaulate Their Life Insurance Options

Did you know that New York consumers have a minimum 10-day "free look" period after buying a life insurance policy?

"It's always best to shop for insurance and to understand all the details of a policy before buying it. However, an important consumer protection is the right of the policyholder to return the policy during the 'free look' period. The 'free look' period allows a consumer to cancel a life policy without penalty within a set timeframe if the consumer reconsiders a decision to buy a policy," Insurance Superintendent James Wrynn said.

New York law requires insurance companies to give consumers a minimum 'free look' period of 10 days and a maximum of 30 days, depending on the policy. A 30-day 'free look' period is required for any policy offered through the mail and a 60-day period is required if another policy is being replaced. The 'free look' period for each individual policy is shown on the policy's face page.

"Buying a life insurance policy is an important decision because adequate insurance helps safeguard a family's security when the policyholder passes away. The need for life insurance can vary with a consumer's age and responsibilities. Consumers should review their life insurance needs every few years to keep up with changing financial and personal circumstances," Wrynn said.

The New York State Insurance Department urges consumers to carefully analyze their need for life insurance, understand how the cost of life insurance is determined and evaluate the different types of insurance before deciding to buy a policy.

Paying off a mortgage, providing for children's education, or ensuring a spouse has an adequate monthly income are just a few of the reasons people purchase life insurance. The premium rate for a life policy is largely based on a sharing of the risk of death by a large group of policyholders and interest earnings on the invested portion of the premium by the insurance company.

For the most part, there are two types of insurance plans, term or permanent life insurance, or some combination of the two. Term insurance provides protection for a specified period of time. Permanent insurance – sometimes called cash value life insurance because it may generate a savings element – is designed to provide coverage throughout a person's lifetime.