What Is the Annuity Free Look Period?
States regulate annuities, and most states require a free look period. During this time, which should be clearly indicated in the contract, the buyer can cancel the contract and receive a full refund of their premium without paying fees or surrender charges.
Key Facts About Free Look Period
- The free look period is an opportunity to carefully consider your new contract and how it aligns with your needs.
- During this time, you can opt to cancel your annuity contract without facing a penalty. This helps protect customers from locking into a product they do not want or need.
- Free look periods vary by the annuity provider. Most states require a minimum length for the free look period, usually between 10 and 30 days.
This period essentially provides customers one final opportunity to be certain that they want this annuity and that it makes sense for them.
While most states require a minimum of 10 to 30 days for free look provisions, insurance companies may provide longer free look periods than are required by law.
The free look period is sometimes referred to as a grace period. However, the term grace period usually relates to the amount of time you have to make payments past their due date.
Protections for Annuity Holders
The free look period is 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 may even seek the advice of a lawyer, financial advisor or trusted family member to review the policy for you. As Tim Melia, Certified Financial PlannerTM professional at Embolden Financial Planning, told Annuity.org, “A wise use of the free-look period may include seeking professional advice on the contract. Have someone familiar with annuities review it — an acquaintance or a paid advisor — and consider their opinion.”
Melia also recommended giving thought to annuity alternatives. “Consider if there are better or less expensive alternatives; can the same annuity benefit be replicated with other investment opportunities that are more liquid or less expensive?” Melia asked. “Consider if an annuity is actually the right investment in the context of your overall financial goals.”
If you decide you don’t want the annuity after all, you can cancel your contract without having to explain why as long as you’re still within the specified free look period. Just remember, the clock starts ticking when your annuity contract is delivered to you.
The free look period is one of the most important consumer protection mechanisms built into the insurance sales process. Annuity shoppers should familiarize themselves with both their state’s required free look period as well as the standard free look period offered by an insurance company. While certain states have no legal requirement for a free look period, it is still standard practice for insurers to offer this feature on contracts.
Stephen Kates, CFP®Principal Financial Analyst for Annuity.orgStephen Kates, CFP® is a personal finance expert specializing in financial planning and education. He serves as the Principal Financial Analyst for Annuity.org, where he delves into industry trends to support consumers and financial advisors on wealth management, annuities, retirement planning, and investing.
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State Regulation of Free Look Periods
The duration of the free look period depends on the state in which you purchase your annuity. The regulations vary widely.
A few states require longer free look periods for older adults, including Arizona, California and Florida. Virginia requires a 10-day free look period for replacement contracts, but the state has no legal requirement for new annuities.
Other states, like Colorado and Vermont, have no legally required free look periods. Meanwhile, states like Maine and New Mexico require free look periods only if the annuity company failed to provide the purchaser with the required consumer guide information.
Regardless of 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
| State | Free Look Period Minimum Requirements |
| Alabama | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Alaska | 10 days |
| Arizona | 10 days, or 30 days if the 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 | 30 days |
| Colorado | No legal requirement |
| Connecticut | 10 days |
| Delaware | 10 to 15 days |
| Florida | 21 days |
| Georgia | 10 days |
| Hawaii | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Idaho | 20 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Illinois | 10 days |
| Indiana | 10 days |
| Iowa | 10 days |
| Kansas | 10 days |
| Kentucky | 10 days |
| Louisiana | 10 days |
| Maine | 15 days |
| Maryland | 10 days |
| Massachusetts | 20 days |
| Michigan | 10 days |
| Minnesota | 10 days for a new policy30 days for a 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 for a new policy30 days for a replacement policy |
| Nevada | 10 days for a new policy30 days for a replacement policy |
| New Hampshire | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| 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 to 30 days |
| North Carolina | 10 days for a new contract30 days for a replacement contract |
| North Dakota | 10 days |
| Ohio | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Oklahoma | 15 days when the buyer’s guide and disclosure document are not provided at or before the time of application |
| Oregon | 10 days for a new contract30 days for a replacement contract |
| Pennsylvania | 10 days for a new contract20 days for a replacement contract |
| Rhode Island | 20 days |
| South Carolina | 10 days, or 30 days if sold by mail order |
| South Dakota | 10 days |
| Tennessee | 10 days |
| Texas | 20 days for a new contract30 days for a replacement contract |
| Utah | 10 days |
| Vermont | 10 days |
| Virginia | 10 days for a replacement contractNo legal requirement for a new contract |
| Washington | 10 days |
| West Virginia | 15 days |
| Wisconsin | 30 days for a replacement contractNo legal requirement for new contracts |
| Wyoming | 30 days for a replacement contractNo legal requirement for a new contract |
Worried About Your Retirement Savings?
Frequently Asked Questions About the Annuity Free Look Period
The free look period for an annuity usually begins on the day you receive your annuity contract.
Fixed annuities, like all types of annuities, have a free look period of 10 to 30 days during which you can cancel your contract with no surrender charges in most states.
Yes, during the free look period, you should receive a full refund of your premium without any deductions or penalties.
The free look period is set by state regulations and the insurance company’s policies. It is typically not extendable. However, always check with your insurance provider or agent for specific details.
Once the free look period ends, the terms and conditions of the annuity contract apply. If you wish to cancel or withdraw from the annuity after this period, you might face surrender charges or other penalties based on the contract’s terms.
