What is a "Free Look" Period With an Annuity?

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The best thing that the annuity industry has ever done is to implement a free look period that goes with every annuity sale. Whoever had this idea initially and actually convinced all the annuity carriers to agree to offer it deserves a meritorious service medal. 

The free look provision is one of the only ways that prospective annuity customers can to try to protect themselves from the largely unregulated annuity sales practices that dominate the current landscape. It is always best to be proactively educated about annuity purchases, but sometimes the sales pitch gets in the way. Let’s take a look at the specific features of the annuity free look provision so you know your options if you've already bought or decide to buy an annuity.

How Long Is the "Free Look" Period?

You can have a "free look" with your annuity from 10 to 30 days depending on the state. It would be easy if all of the states had the same rules and time frames for the free look period, but they don’t. 

Instead, each state sets its own rules, and the free look period can range from 10 to 30 days. Because of this lack of uniformity, it’s important to know the rules for your state. In a perfect world, the agent should inform you of the specific parameters of your state’s free look period during the sales process, but it's wise to ask them if they don't. 

When Does the "Free Look" Start?

The free look period starts when the annuity policy is delivered to you. Some carriers require you to sign an actual delivery receipt, but it’s important to remember that the clock starts ticking as soon as you get your hands on the actual policy. The other key fact is that the days counted are calendar days, not business days, so Saturday and Sunday are included.

When the policy is delivered, it is always a good time to give the carrier a call just to verify how the annuity works and to confirm the promises made during the sales process. Don’t call the sales agent; make sure to 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 up with the sales pitch, then you can free look the policy right on that call.

Do You Need a Reason to Refund Your Policy?

No, you don't need to state a reason to request a "free look" refund for your annuity policy. The best part about the free look provision is that you do not have to explain why you want a full refund. You also don’t have to speak with the selling agent at all. Instead, you can just call the company who issued the policy and tell them to send your money back. There might be one form to sign (depending on the carrier), but the customer service people at the carrier will not try to talk you out of it. As long as you follow the time frame rules, you will get your money back no questions asked.

Where Are the "Free Look" Rules Outlined?

The rules vary by state, and if you navigate your web browser to NOLHGA.com, this is where you can find the annuity "free look" rules governing the state in which you're interested.

The National Organization for Life & Health Guaranty Association is the overseeing body for all of the state departments of insurance. This site has a link to every state insurance department where you can find your specific state’s free look provision rules.

If you are ever high-pressured into signing annuity paperwork, don’t really know what you bought, or simply want your money back, it’s important to know that you can get your money back early on without question. Just use the free look provision. It’s good news for all potential annuity buyers, and one piece of information you should never forget.

The annuity free look provision is definitely the consumer’s friend and can bring you peace of mind. Think of it as your get out of an annuity free card. With aggressive sales incentives, and crazy agent sales incentives that ruining the annuity industry, it is possible to be up-sold into an annuity you really don't need. Remember that the free look period is just one last way to make sure your annuity is right for you. If not, you can request your money back during the free look period allowed in your state.