Life License Qualification Program (LLQP) Practice Exam

Which action is NOT required before a life insurance policy goes into effect?

1. Policy is delivered

2. Free-look period has expired

3. Insurance company issues policy

4. Initial premium is collected

The correct answer is: Free-look period has expired

The correct answer is the one that identifies the action that is not required before a life insurance policy goes into effect. Before a life insurance policy becomes effective, certain key actions are necessary, including the delivery of the policy, the issuance of the policy by the insurance company, and the collection of the initial premium from the policyholder. The “free-look period” refers to a specified time after the policyholder has received the policy, during which they can review the terms and cancel the policy for a full refund if they are not satisfied. However, this period occurs after the policy is already in effect, meaning the policy has been issued and delivered. Therefore, the expiration of the free-look period does not impact the initial effectiveness of the policy. In summary, while the delivery of the policy, collection of the initial premium, and issuance by the insurance company are critical steps that must be completed for the policy to be in effect, the free-look period is not a prerequisite for the policy to become effective.