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Consumer Protection Long-term Insurance Policy Rights
A client receives the policy summary of a new hospital cash plan on 1 June. On 8 June she is hospitalised, claims, and is paid a benefit. On 13 June she tries to cancel the policy under the cooling-off provisions and asks for her premium back. What is her position?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) She may cancel and recover the premium, because she is still within 31 days of receiving the summary.
- b) She may cancel, but must first repay the benefit she received from the insurer.
- c) Cooling-off is not available, because the period ended seven days after she received the summary.
- d) Cooling-off is no longer available, because a benefit has already been paid under the policy.Correct
Why this is the answer
A policyholder may cancel within 31 days of receiving the policy summary only where no benefit has yet been paid or claimed under the policy. Once she has claimed and been paid, the cooling-off right falls away, even though the 31 days have not expired. She may still cancel the policy in the ordinary way, without a refund.
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