How can a `free-look provision' as part of a life insurance policy help criminals to launder money?

Question

Options

• AA policy owner can decide how to pay the premium within a pre-defined period.
• BA policy owner is able to terminate the contract without penalties such as surrender charges.
• CA policy owner has freedom to decide who the beneficiary of the policy will be and can in this way
• DA policy owner has freedom to decide who the beneficiary of the policy will be and can in this way

• A
  2% (1)
• B
  81% (44)
• C
  4% (2)
• D
  13% (7)

Explanation

A free-look provision is a period of time, typically 10 to 30 days, in which a new life insurance policy owner can terminate the policy and have their premium refunded. This can help criminals to launder money by purchasing a policy with illicit funds and then cancelling it within the free-look period to receive a clean check from the insurance company. This way, they can disguise the source and origin of their funds and avoid any penalties or charges that would otherwise apply to early termination of the policy.

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