All RE5 questions
Financial Products Apply knowledge of the financial products and services environment
A long-term insurance client changes their mind shortly after taking out a policy. Which mechanism may allow them to cancel within a short window after inception?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) A cooling-off right, allowing cancellation within the prescribed period after the policy is entered into (subject to conditions).Correct
- b) A guaranteed lifetime right to cancel at any time with a full refund of all premiums ever paid.
- c) No cancellation is ever possible once a policy is signed.
- d) Cancellation only with the FAIS Ombud’s prior written consent.
Why this is the answer
Long-term insurance offers a cooling-off period during which a policyholder may cancel shortly after inception (subject to conditions, e.g. no claim/benefit yet paid). It is a limited early-cancellation right, not an unlimited lifetime refund.
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