How to Utilise Your Cooling-Off Period in Life Insurance Policies

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Most people are aware that you have a cooling-off period when buying a house ... some are also aware that if you buy a car from a dealer, you also get a cooling off period. However, most people aren't aware that life insurance policies have the same sort of grace period! The government requires life insurance companies to offer a cooling off period of at least 14 days ... and it can be a very wise long term decision to utilise it. Today we check out how you can best make use of your cooling off period in life insurance contracts.

How long do I have?

The 14-day cooling off period for life insurance contracts mandated by the government:
Starts either when you receive your Certificate of Insurance (and the associated policy document), or five days after you signed the contract or paid your premium
Last for 14 days of any type. Where some cooling off periods measure time in clear business days, life insurance contract cooling off periods are measured in ordinary days.

Note that if you haven't received your Certificate of Insurance and policy document within those five days after you've signed the contract, you should follow up immediately with the insurer - otherwise time will be ticking away and you won't have the specific information you need to make sure the life insurance suits you.


What should I do in my cooling off period?

You have several options:
Closely review the policy document yourself
Have a financial adviser review it
Have your legal representative review it

Remember that, with general insurance, if you make a claim during the cooling off period then you don't get your free cancellation rights if you find that the contract actually doesn't suit you. With life insurance, this should almost never be an issue!

What if I want to cancel the contract?

Simply write a plain language letter informing your life insurance company of your choice, and either:
Send it to them via registered post
Fax it to them, and request a written confirmation of fax received
Email it to them with a read receipt request, or email it to them and ask for a confirmation email back when it is received.

Some people advise you to get legal advice if you wish to cancel a contract within the cooling off period. This is not necessary for life insurance contracts - the laws are designed so that you don't have to go to the extra expense of getting legal advice.

Will I get all my money back?

How much money you get back can vary according to the insurer. Some will refund the entire amount, some will refund the entire amount less any government charges, and some will also charge you an administration fee to cancel within the cooling off period.

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About the Author

Pamela Doove

Pam has been writing for over 5 years and particularly enjoys writing insurance articles related to life insurance and income protection..