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State Law: Is There a Free Look Period for Annuities?

Stan Haithcock
February 29, 2024
State Law: Is There a Free Look Period for Annuities?

Can you get out of an annuity once you buy it? Is there a provision for you to reverse the mistake you think you've made? Good question and I will explain today the free look time periods for annuities regulated by the states. By the way, my name is Stan The Annuity Man, America's annuity agent. We will go over the details of the free look provision, what it's called in the business, and how it can benefit you.

‌Client Example

‌Being Stan The Annuity Man, America's annuity agent, I get hundreds of emails a day and tons of calls from people, which I encourage you to do as well. I love that. I love interacting with all of you out there and trying to help America make the right decision when it comes to annuities. The call I got last week was a typical call and somewhat disturbing. The person had gone to the bad chicken dinner seminar, eaten the meal, saw the presentation, bought the annuity, and had buyer's remorse. He called and asked, "Is there a way to get out of the annuity I just purchased?" Well, the first thing I asked is, when did you buy it? And he had bought it maybe seven to 10 days ago. Now the question is, where does he live? And it dovetails with what we're going to talk about: the free look provision and how the states run it.

‌No Questions Asked

‌Fortunately for him, he lived in a state where he could get his money back without questions. The great part about the free look provision with annuities is you don't have to provide a reason or an explanation. You don't have to document anything. If you're within your state's free look time period and have a policy that you don't want and want all your money back without question, a 100% refund, all you have to do is call the carrier, not the agent. Call the carrier that issued the policy, and they will send you your check without question, without hesitation, without hassle, without anything. And let me tell you this: the annuity industry takes a bad rap, and a lot of the bad rap has been well-earned because it's kind of a wild, wild west. From a sales environment standpoint, I do not blame the carriers.

‌It is hard to oversee an army of agents and what they say every day. In fact, it's impossible. You really can't blame the carriers. They do as good a job as they can with doing that. My argument is they can maybe do a little bit better with some of the TV and radio ad stuff that you see. But the annuity industry has one thing that nobody else in the financial business has: the free look time period. It's the only financial product that you can get your money back after the product is enforced and issued.

‌Try to do that with stocks, bonds, mutual funds, or ETFs. You can't. Now, I know logistically that's crazy, but think about it. You can buy an annuity, get the policy delivered to you, and get your money back if needed. The other thing, too, is if the agent who sold it to you is a scoundrel and they've used high-pressure sales tactics or lied to get the sale, which I hope didn't happen, but let's just say they did, that commission that they earned, they have to pay that back to the carriers.

‌You might want to keep that in the back of your head. That's an old gotcha because you don't have to deal with the agent. If you want to free look the policy, you can free look it, call the carrier or call that company, they'll send your money back and then the carrier will call that agent and say, "Oh, by the way, send us that commission back."


‌It sounds pretty good to me; nod your head, right? It is good. Actually, I'm very proud of the industry for standing behind the free look time period. I think it's great. Now, you do have to understand this. With Fixed Annuities, Fixed Index Annuities, Single Premium Immediate Annuities, Deferred Income Annuities, Multi-Year Guarantee Annuities, and Qualified Longevity Annuity Contracts, I know I just riffed that. How about that?

All of those are regulated at the state level. Every state has a different free look time period. So, the question begs Stan The Annuity Man, America's annuity agent, "Where do I find that info?" I'm getting ready to tell you. Bang right there, . Write it down. You got it? Okay. NOLHGA stands for National Organization of Life and Health Insurance Guaranty Associations. That's what that is. But on that site, they'll have a dropdown showing every state; pick your state of residence. Once you click that, it'll take you to a website, and then under that, you'll see FAQs, which stands for frequently asked questions, and then you'll see the state guarantee for your state, whether it's 10 days, 20 days, or 30 days.

‌State Guaranty Fund

‌Now, it is important to understand this: the clock starts ticking on a free look at the state guaranty fund on a free look when you receive the policy. So, when you go to the FAQs, you'll see the state guaranty fund and how much it covers per policy, and then you'll also see what the free look time period is. It is probably a combo of those answers, but the clock starts ticking when you receive the policy. If that's a Saturday, it starts clicking on a Saturday. It's not like weekdays. Understand that. You can't dilly around. I like the word dilly. You can't dilly around. You've got to say, "Hey, I either don't feel comfortable." And I always tell people, listen to your gut feeling on this. If it doesn't feel right, if what you were told doesn't feel right, you should call the carrier and verify what you understand the product to do.

‌And if you don't hear what you were sold during the sales pitch, then get your money back. It's really, really that simple. Now, with Immediate Annuities and things like that, and free look time period, once you receive a payment, it's game over. You're going to receive those payments. You're locked and loaded, but you can get your money back even with an Immediate Annuity before those payments hit within your state's free look time period.

‌I'll close with this before I tell you how to get my books, so you need to hang in there, but you need to understand this. There's only one level of protection that annuity consumers like you have when it comes to annuities. When you're being pitched that too good to be true product, write down exactly what that agent and advisor tells you to the penny.

Write it down exactly how you understand it, how it was pitched, and how they explained it would work. Write it down in detail, the most details you can. Sign and date it at the bottom, and then have the agent who pitched that to you sign and date it as well. Now, what we're finding when we tell people to do that is the majority of the time, the agent will not sign and date that. They'll have to clarify some points, which is great but also a red flag. And you might want to ask yourself, "Why am I dealing with this person who didn't give me all the info upfront?" The other good news is we're finding out that when people do that, in many cases, it's exactly what will happen in the policy, agent signs, and dates, and you're in good shape. But that's the only real consumer protection out there with annuities.

‌Hey, we're here. Go to my site, The Annuity Man, to get all my annuity owner's manuals for free. They're very simple, easy-to-read owner's manuals on all types of annuities. No cost or obligation. My job as America's annuity agent and the number one annuity agent on the planet is to educate you. Yes, I do sell annuities, but only if they are appropriate and suitable for your specific situation. We are licensed in all 50 states, so connect with us if needed. If not, I'll see you on the next blog.

Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.

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