Most new annuity contracts have a provision called the free look period that gives the purchaser 10 to 30 days to consider the terms of the contract. During this time, which should be prominently indicated in the contract, the buyer can cancel the contract and receive a full refund of their premium without paying surrender charges.
States regulate annuities, and most states require a free look period. Insurance companies can provide longer free look periods than required by law.
Sometimes this is referred to as a grace period. But usually, the term grace period relates to the amount of time you have to make payments past their due date.
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The free look period is one of several reforms that addressed abusive sales tactics in the first half of the 20th century. It’s designed to help consumers make decisions without being pressured or badgered. It gives people a chance to further review their financial decision and ensure it’s the best option for them.
During the free look period, you can still research your annuity and see if others have a better deal. You can make sure you understand how your annuity works. You can read your contract and ask questions. You can ask a lawyer or a financial advisor or a family member to review the policy for you.
And in the end if you decide you don’t want the annuity after all, or you want to purchase one from a different provider, you can cancel your contract without having to explain why, as long as you’re still within the specified free look period. You don’t even have to contact your agent to cancel if you don’t want to. You can just call the insurance agency that issued the annuity. Just remember, the clock starts ticking when your annuity contract is delivered to you.
States Regulate Free Look Periods
The amount of time you have to change your mind about an annuity depends on the state in which you purchase your annuity. And the states are all over the map on this — in more ways than one.
Some states, such as Arizona, California and Florida, require longer free look periods for senior citizens. Other states, such as Alaska, Nevada, Ohio, Oregon and Texas, require longer periods for replacement annuity policies than for new policies.
Wyoming requires a 30-day free look period for replacement policies, but it doesn’t require one for new annuity contracts. Virginia requires a 10-day free look period for replacement contracts, but the state has no legal requirement for new annuities.
Some states, such as Colorado and Vermont, have no legally required free look periods. Other states, such as Maine and New Mexico, require free look periods only if the annuity company failed to provide the purchaser with required consumer guide information.
And yet other states, combine the various requirements. Ohio and Hawaii, for example, require a 10-day free look period for new annuity contracts. That increases to 15 days if the buyer wasn’t provided with required information at the time of purchase. And it goes up to 30 days for replacement annuity contracts.
In Alabama, there’s a 30-day free look period requirement for replacement contracts and a 15-day period when the consumer buyer’s guide and disclosure document aren’t provided at or before the time of application. But when the information is provided on a new contract, the law doesn’t dictate any free look period requirement.
No matter the individual state’s requirement, annuity providers everywhere are allowed and encouraged to include free look periods in their contracts. Even in states where no free look period is required by law, officials say free look periods are standard practice with little or no deviation.
Brenda Clark, a consumer services administrator with the Vermont Department of Financial Regulation, told Annuity.org that “no company has ever pushed back” on providing consumers with contracts that abide by this standard.
If your contract doesn’t include a free look period provision, you should ask why it doesn’t.
State Requirements for Free Look Periods
| States | Free Look Period Requirements |
|---|---|
| Alabama | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application 30 days for replacement contracts |
| Alaska | 10 days for new policies 30 days for replacement policies |
| Arizona | 10 days 30 days if purchaser is 65 years old or older |
| Arkansas | 10 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| California | 10 days 30 days for seniors |
| Colorado | No legal requirement |
| Connecticut | 10 days |
| Delaware | 10 days to 15 days |
| Florida | 14 days 21 days for seniors |
| Georgia | 10 days |
| Hawaii | 10 days for new policies 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application 30 days for replacement policies |
| Idaho | 20 days |
| Illinois | 10 days |
| Indiana | 10 days |
| Iowa | 10 days 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Kansas | 10 days |
| Kentucky | 10 days 30 days for a replacement contract |
| Louisiana | 10 days |
| Maine | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Maryland | 10 days |
| Massachusetts | 20 days |
| Michigan | At least 10 days |
| Minnesota | 10 days for new policy 30 days for replacement policy |
| Mississippi | No legal requirement |
| Missouri | 10 days |
| Montana | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Nebraska | 10 days |
| Nevada | 10 days for new policies 30 days for replacement policies |
| New Hampshire | 10 days |
| New Jersey | 10 days |
| New Mexico | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| New York | 10 days to 30 days |
| North Carolina | 10 days 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| North Dakota | 20 days for individual annuity contracts |
| Ohio | 10 days for new contracts 15 days if no illustration given at the time of application 30 days for replacement contracts |
| Oklahoma | 20 days |
| Oregon | 30 days for replacement contracts |
| Pennsylvania | 10 days |
| Rhode Island | 20 days |
| South Carolina | 10 days for new policy 20 days for replacement contract 30 days if solicited by direct response rather than agent |
| South Dakota | 10 days |
| Tennessee | 10 days |
| Texas | 20 days for new contracts 30 days for replacement contracts |
| Utah | 10 days for new policy 30 days for replacement policy |
| Vermont | No legal requirement, but spokeswoman says 10 days is standard |
| Virginia | 10 days for replacement contracts No legal requirement for new contracts |
| Washington | 10 days (insurance company has 30 days to send refund) |
| West Virginia | 10 days minimum |
| Wisconsin | 30 days for replacement contract No legal requirement for new contracts |
| Wyoming | 30 days for replacement contract No legal requirement for new contract |
Annuity.org compiled the free look period data from state government websites and email correspondence with state employees. State laws may change, so it’s always best to check with the agency that regulates annuities and insurance in your state to be sure. Also, make sure the free look period is spelled out in your annuity contract.
