What is the minimum free look period that must be granted to a senior citizen in California who is buying an individual annuity contract?

Q: What is the free look period for annuity contracts?

Variable annuity contracts typically have a free look period of ten or more days. During this period, you are free to terminate your contract without paying any surrender charges and you will receive a refund for the amount you paid.

What Is the Free Look Period?

The free look period is the required time period in which a new life insurance policy owner can terminate the policy without any penalties, such as surrender charges. A free look period often lasts 10 or more days depending on the insurer.

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What Is the Free Look Period?
Key Takeaways
How Free Look Periods Work
History of the Free Look Period
Example of the Free Look Period
"Free Look" Period Explained
Definition and Example of a Free Look Period
How the Free Look Period Works
What It Means for Your Retirement
Key Takeaways
What is the free look period in California?
What is the free look period for annuity contracts?
What is the minimum age for an annuity?
Should an 80 year old buy an annuity?

During the free look period, the contract holder can decide whether or not to keep the insurance policy; if they are not satisfied and wish to cancel, the policy purchaser can receive a full refund.

Free look periods are most commonly associated with life insurance policies. Laws vary by state.

Key Takeaways

The free look period is a required period of time, typically 10 days or more, in which a new life insurance policy owner can terminate the policy without penalties, such as surrender charges.
If a policyholder is not satisfied with the terms and conditions of the policy, they can cancel and return the policy during the period and get a full refund.
The free look period is for the benefit of a policyholder.

How Free Look Periods Work

Insurance policies are legal contracts that grant rights and responsibilities to both the insurer and policyholder. If you are not satisfied with the terms and conditions of the policy you have purchased, you can cancel and return the policy within a specified period after receiving it, and your premiums will be fully refunded. Here, the time frame will vary depending on your insurer.

During the free look period, sometimes known as the free examination period, the purchaser can continue to ask the insurer questions regarding the contract as a way of better understanding the policy. If refunded, the amount given back may equate to the value of the account at cancellation or the number of payments, depending on the state in which the policy was written.

The free look period is for the benefit of a policyholder. It provides additional time to review a new life insurance policy in depth. Policyholders might also ask their agent, lawyer, or company representative to review their policy's terms and conditions. Once a policyholder is in receipt of a new life insurance policy, the free look period begins. If you decide to cancel the policy, you must notify your agent or company representative with your request(s).

History of the Free Look Period

The U.S. life insurance industry was once very poorly regulated and rife with scams. Back in the 1930s and 1940s, the industry tended to attract unscrupulous characters. Much of the life insurance industry got a bad reputation because of high-pressure tactics, badgering of customers, and many disreputable, insolvent, or nonexistent insurance companies that never paid claims.

Luckily, the industry has vastly improved since those days. The negative reputation of the past forced the industry to reform its practices. State governments also got heavily involved with complaints about abusive sales strategies. They also responded with legislation; this is one of the reasons the free look period came into existence.

Example of the Free Look Period

Let's say that Sam, who lives in Texas, buys a variable life insurance policy from their local insurance agent. After signing up for the policy, Sam receives their executed policy documents in the mail two days later. Sam's free look period begins when they receive those documents. In Texas, they have 10 days to review the policy and decide whether they want to keep it.

Two days later, Sam brings their policy to their lawyer to review, and their lawyer advises them to cancel the policy and go with another insurer instead. Sam takes their lawyer's advice and advises their insurer the next day that they want to cancel the policy. The insurer is obliged under law to comply with their wishes, and the insurer refunds Sam's initial premium payment.

"Free Look" Period Explained

Definition

The free look period is a set time during which purchasers of annuities can walk away from the transaction penalty-free, with no reason required. Each state sets the length of the period.

Photo:

RobinRoper / Getty Images

The free look period gives you a period where you can walk away from buying an annuity penalty-free, with no reason required. Each state sets the length of the period.

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.

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.

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.

What is the free look period in California?

Free look—The right of the buyer to have a period to examine an annuity product and, if not satisfied, return it to the company for a full refund. Seniors have a 30-day free-look period. Immediate annuities—Annuities providing income payments that start within a year after you buy the annuity.

What is the free look period for annuity contracts?

Variable annuity contracts typically have a "free look" period of ten or more days. During this period, you are free to terminate your contract without paying any surrender charges and you will receive a refund for the amount you paid.

What is the minimum age for an annuity?

There is no federally set minimum age for buying an annuity. Some companies will only sell annuities to individuals after they turn 40. At Canvas, we believe that it's never too early to start saving for retirement. That's why we sell annuities to anyone over 18 years old.

Should an 80 year old buy an annuity?

Annuities can help seniors build tax-deferred savings to handle retirement costs such as healthcare and living expenses. Immediate annuities tend to be the best annuities for seniors because they begin paying out within 12 months of purchase.