What Is a Cooling-off Period in Insurance?

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Purchasing a life insurance policy is an important decision requiring a long-term financial commitment. To protect consumer interests, life insurance products in Hong Kong have a cooling-off period, which gives policyholders a chance to rethink their purchase and cancel their policy for a full refund.

In Hong Kong, the cooling-off period for life insurance policies is part of the regulations and industry practices set out by the Insurance Authority (IA), Although the Guideline on the Cooling-off Period does not have the force of law, non-compliance might bring the insurer or insurance intermediary under the scrutiny of the IA. One of the purposes of the Guideline is to guide the IA in assessing if a party has acted against the interests of policyholders

Buying insurance is a big decision. You have the right to change your mind. The cooling-off period protects this right.

What is the insurance cooling-off period?

The cooling-off period is the period within which the policyholder has the right to cancel their insurance policy and receive a full refund. This period is 21 calendar days for life insurance in Hong Kong. From page 5 of the Guideline:

The Cooling-off Period is the period of 21 calendar days immediately following the day of the delivery to the policy holder or the nominated representative of the policy holder, of:

(a) the life insurance policy; or (b) the Cooling-off Notice,

whichever is the earlier. For the avoidance of doubt, the day of delivery of the life insurance policy or the Cooling-off Notice is not included for the calculation of the 21 calendar day period. However, if the last day of the 21 calendar day period is not a working day, the period shall include the next working day.

Note that the date of delivery is not the same as the date of issue, nor is it the same as your plan or policy start date. To clarify:

• **Date of issue: **The date on which the insurer, after accepting the application for insurance, creates the life insurance policy document for the policyholder.
• Delivery date: The date on which the policy or the cooling-off notice is delivered to the policyholder (whichever is earlier). This should be within 9 calendar days of the date of issue.
• Plan or policy start date: The first day of the plan or policy year, indicated on the certificate of insurance.

Cooling-off notice, statements and reminders

It is the responsibility of insurers and insurance intermediaries (insurance agents representing the insurer and insurance brokers representing the client) to clearly explain, notify and remind the policyholder of the cooling-off period during the application stage and when the policy is issued.

For example, when you fill out an application for life insurance, you will see a statement explaining the cooling-off period right above the place for your signature. And when you are issued your policy, the insurer will include a reminder about the cooling-off period, either in the form of a letter or printed on the policy jacket or cover.

The cooling-off notice is a document issued by the insurer and delivered to the policyholder around the time the policy is delivered. The notice informs the policyholder of the availability of the policy, as well as the cooling-off period’s expiry date. It explains to the policyholder their right to reconsider their purchase, cancel their policy and be refunded any premiums paid during the cooling-off period. Lastly, the notice contains the contact information for the insurer’s customer service department (such as their telephone hotline, address and email address).

How long is the cooling-off period?

For Hong Kong life insurance policies, the cooling-off period is 21 days following the day of the delivery of the policy or the cooling-off notice (whichever is earlier). That’s 21 calendar days, not 21 working days.

If the last day of that 21-day period is not a working day, then the cooling-off period will include the next working day. Working days as defined in the Guideline are days that are not: public holidays (including Sundays); Saturdays; or a gale warning day or black rainstorm warning day.

Below are some examples of cooling-off periods

Typical cooling-off period

• Date of issue: Wednesday, August 17, 2022
• Date of delivery: Thursday, August 18, 2022
• First day of 21-day period: Friday, August 19, 2022
• Last day of 21-day period: Thursday, September 8, 2022

If the last day is a statutory holiday

• Date of issue: Thursday, April 7, 2022
• Date of delivery: Monday, April 11, 2022
• First day of 21-day period: Tuesday, April 12, 2022
• Last day of 21-day period: Monday, May 2, 2022 (Labor Day, a public holiday)
• Adjusted last day: Tuesday, May 3, 2022

Because the last day is not a working day, the cooling-off period must then include the next working day: Tuesday, May 3.

If the last day is a black rainstorm warning day

• Date of issue: Monday, June 7, 2021
• Date of delivery: Monday, June 7, 2021
• First day of 21-day period: Tuesday, June 8, 2021
• Last day of 21-day period: Monday, June 28, 2021 (black rainstorm warning)
• Adjusted last day: Tuesday, June 29, 2021

Because the last day fell on a black rainstorm warning day, it is not considered a working day, so the cooling-off period must include the next working day: Tuesday, June 29.

Check your cooling-off notice

If in doubt about the dates for your cooling-off period, check the cooling-off notice issued by the insurance provider. It should state the date of expiry. Alternatively, you can contact your broker or insurer for clarification.

How Alea can help you save on insurance

How do I exercise my right to cancel during the cooling-off period?

To exercise your right to cancel your life insurance policy during the cooling-off period, the policyholder must provide written notice (with signature) directly to the insurer requesting cancelation and return the policy document (if any).

Some insurers require written notice delivered in hard copy, whereas others may accept by email. You will need to check the cooling-off notice or contact your insurer or broker to find out the exact details.

Either way, be sure the cancelation notice is received by the insurance provider within the cooling-off period. Otherwise you will not receive a full refund.

What refund will I get if I cancel during the cooling-off period?

If you cancel your policy during the cooling-off period, you will get a full refund of any premiums and levies paid, provided that no claim payments have been made under the policy. The refund may be subject to a market value adjustment (MVA), depending on the type of policy you have.