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A client receives the policy summary of a new life policy on 1 March. No benefit has been paid or claimed. On 21 March she decides that she does not want it. 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.

  1. a) She may cancel only if she can show that the policy was unsuitable for her needs.
  2. b) She may cancel within 31 days and recover her premiums, less the cost of risk cover.Correct
  3. c) She may cancel and recover all premiums in full, with no deduction of any kind.
  4. d) She may not cancel without penalty, because the cooling-off period is 14 days from receipt.

Why this is the answer

A policyholder may cancel a long-term policy within 31 days of receiving the policy summary, provided no benefit has been paid or claimed. The premiums are refunded, subject to deduction of the cost of any risk cover actually enjoyed. She does not have to give or prove a reason.

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