Free-Look Periods: Your Right to Cancel a New Insurance Policy or Annuity
Most states give buyers of life insurance, annuities, and some health-related policies a short window to cancel for a refund after the policy is delivered. Here is how it works and how to use it.
After buying certain insurance policies or annuities, you typically have a free-look period, a short window after the contract is delivered during which you can cancel and get a refund. It exists so you can read the actual contract, not just the sales materials, and change your mind.
How it works
- The period usually starts when the policy is delivered to you, not when you applied.
- Length is set by state law and the contract, commonly at least 10 days, with longer periods in many states for certain products, buyers 65 and older, or replacement policies.
- If you cancel within the period, you generally receive a refund of premiums paid. For variable annuities, some states allow the refund to reflect investment gains or losses during the period.
- Cancel in writing, following the contract's instructions, and keep proof of the date sent.
What to review during the free look
- Note the delivery date. Mark the deadline on your calendar.
- Read the whole contract. Compare it with what you were told.
- Check the application. Make sure every answer is accurate.
- Check fees and surrender terms. Especially for annuities and permanent life policies.
- Decide and act in writing. Cancel before the deadline if it isn't right.
Questions to answer:
- Is the coverage amount, term, and premium what you expected?
- Are the riders and fees what you agreed to?
- For annuities: what are the surrender charges and how is interest credited? See annuities explained.
- For life insurance: are the application answers correct? Errors can matter during the contestability period.
- If this replaced an existing policy, were you told about the costs of replacing it?
Don't cancel the old policy too soon
If you're replacing an existing policy or annuity, keep the old one in force until you're sure about the new one and the free-look period has passed. Otherwise you could end up without coverage or face new surrender charges.
The takeaway
The free-look period gives you a short, valuable window to read the contract and cancel for a refund if it isn't what you expected. Know your deadline, read everything, and act in writing.
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