What Is an Annuity Free Look Period?

"Free Look" Period Explained

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Updated on June 16, 2022

Definition and Example of a Free Look Period

The free look period for an annuity is a period after the purchase in which you can cancel it without facing any penalties. Free look periods usually last at least 10 days after purchase, depending on state law.

The free look provision is designed to give prospective annuity customers a way to protect themselves from predatory sales practices. In the past, agents were paid commissions for selling annuities. That led them to adopt sales practices that were not in the best interests of their clients. States began regulating annuity sales in 2003, and regulations have been evolving. Nearly half of states have implemented or plan to implement the National Association of Insurance Commissioners' Best Interest Rule, which requires agents to act in their clients' best interests.

How the Free Look Period Works

The free look period starts when the annuity policy is delivered to you. Some carriers require you to sign an actual delivery receipt, but the clock starts as soon as you get the policy. Days counted are calendar days—not business days—so Saturday and Sunday are included.

When the policy is delivered, it's best to call the carrier to verify how the annuity works and to confirm any promises made during the sales process. Don’t call the sales agent; call the annuity company directly. The company’s toll-free number will be on the policy, so if you find out that the guarantees don’t match the sales pitch, you can enact the free look policy right on that call.

The best part about the free look provision is that you do not have to explain why you want a full refund. You never have to speak with the sales agent. There might be a form to sign (depending on the carrier), but the customer service people at the carrier may not try to talk you out of it. As long as you follow the time-frame rules, you will get your money back.

Note

The National Conference of Insurance Guaranty Funds (NCIGF) provides links to each state's insurance guaranty association and can also offer a detailed contact list.

The annuity-free look provision is the consumer’s friend and can bring you peace of mind. It is possible to be up-sold into an annuity you don't need. Think of it as your "get out of an annuity-free" card. It gives you time to continue shopping or have a lawyer or financial adviser review your contract.

The free look period follows the state guidelines outlined in the following table.

State Requirements for Free Look Periods
State	Free Look Period Requirements
Alabama	15 days in some circumstances; 30 days for replacement contracts
Alaska	10 days for new policies; 30 days if you need a replacement contract
Arizona	10 days standard; 30 days if you're 65 years old or older
Arkansas	10 days in some circumstances
California	10 days standard; 30 days if you're 62 or older
Colorado	None required by law
Connecticut	10 days
Delaware	10 to 15 days
Florida	14 days standard; 21 days if you're 60 or older
Georgia	10 days
Hawaii	10 days standard; 15 days in some circumstances
Idaho	20 days
Illinois	10 days
Indiana	10 days
Iowa	10 days standard; 15 days in some circumstances
Kansas	10 days
Kentucky	10 days standard; 30 days if you need a replacement contract
Louisiana	10 days
Maine	15 days in some circumstances
Maryland	10 days
Massachusetts	20 days
Michigan	10 days minimum
Minnesota	10 days with a new policy; 30 days if you need a replacement policy
Mississippi	None required by law
Missouri	10 days
Montana	15 days in some circumstances
Nebraska	10 days
Nevada	10 days with a new policy; 30 days if you need a replacement policy
New Hampshire	10 days
New Jersey	10 days
New Mexico	15 days in some circumstances
New York	10 to 30 days
North Carolina	10 days standard; 15 days in some circumstances
North Dakota	20 days
Ohio	10 days standard; 15 days in some circustances; 30 days if you need a replacement policy
Oklahoma	20 days
Oregon	30 days for replacement policies
Pennsylvania	10 days
Rhode Island	20 days
South Carolina	10 days standard; 20 days if you need a replacement; 30 days if you're solicited and accept the policy
South Dakota	10 days
Tennessee	10 days
Texas	20 days standard; 30 days if you need a replacement contract
Utah	10 days standard; 30 days if you need a replacement contract
Vermont	None required by law, but 10 days is standard
Virginia	10 days if you need a replacement contract; no requirement by law for new contracts
Washington	10 days with a requirement to issue a refund within 30 days
West Virginia	10 days minimum
Wisconsin	30 days if you need a replacement contract; no requirement by law for new contract
Wyoming	30 days if you need a replacement contract; no requirement by law for new contract

What It Means for Your Retirement

Many people experience buyer's remorse after purchasing a financial product.

An annuity is a significant financial commitment. It is an excellent retirement solution for some people; for others, it might not be the best solution—the free look period is your state government's way of giving you time to think about it and ensuring that you're not being taken advantage of by commission-driven sales tactics.

Key Takeaways

The free look provision gives annuity buyers a chance to back out with no penalty.
It generally extends from 10 to 30 days, depending on your state's laws.
You're not required to give a reason, to get your money back.
The provision is a counterbalance to sometimes aggressive annuity sales tactics.

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Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

Investor.gov. "Updated Investor Bulletin: Variable Annuities."
Insurance Retirement Institute. "States Continue to Adopt NAIC Best Interest Model Regulation."
Annuity.org. "Free Look Period."