Free Look Provision

A free look period is loosely defined as a period of time in which US consumers have to cancel a life insurance or annuity product with virtually no reason given and receive a full refund.   This period of time is regulated by the various US State Insurance Regulators and is often quoted as being between 10 and 30 days.   Therefore since each state maintains their own definition - there is no universal definition.

The free look period quantity of days should be listed in obvious print on an annuity or insurance product.

Free Look Period = Free Look Provision

The term Free Look Period also goes by the term Free Look Provision.  It is also sometimes written as either the free-look period, free-look provision, freelook period or freelook provision.  All of these terms are essentially interchangeable.

The so called free look is, by state insurance law, offered for both annuities and life insurance policies. The Whole Vs Term site is dedicated to life insurance and their sales.  However this important term is also used with annuity products.  The free look provision is almost as important to whole life insurance policies as annuities.  There are numerous reasons why free look periods have been instituted.

There are numerous reasons why the free look period was instituted.  One is that most life insurance policies are not delivered until the policy is paid.  Therefore its difficult to expect a client to fully be on the hook for something that they are just seeing for the first time.  Insurance companies understand this.

Another reason that free look provisions were likely instituted was because of pushy insurance agents. Some clients often end up buying something just because they feel uncomfortable.

Another probable reason is based on the requirement to have a codified rule about returning such things. Being that life insurance policies are contracts - it only makes sense to include specific provisions that regulate the possible return of the policies.

My opinion is that free look periods help insurers and agents close sales because we can all reference the amount of time that a the client can cancel the contract.   For some consumers, even ones that you have been explained over and over how the policy works, a free look period that is written on the policy can be calming.

Investopedia defines a Free Look Period as "a period of time in which a new life insurance policy owner can terminate the policy without penalties, such as surrender charges."

Protective Insurance further defines a Free Look "you generally have what is called a free look period. During this time, you have the option of canceling your policy without penalty."

Business Dictionary clarifies it as "Typically a 10-day period during which a new-policy owner is allowed to review and return the policy for full refund of the paid premium, while enjoying the insurance cover. Also called free examination period."

For our purposes we define a Free Look Period in the United States as "a limited state dependent, period of time, in which a consumer of life insurance or an annuity may terminate their policy with no surrender charges, typically with no questions asked."

Alabama Free Look Provision: "the insurer shall provide the disclosure form to the applicant at the time the policy is delivered, with a notice that a full premium refund shall be received if the policy is returned to the company within a 30-day “free look” period."

Alaska's Free Look Period: "Life insurance policies in Alaska are required to include a 10-day free look period."

Arkansas Code Ann 23-79-112: "the insurer shall provide the disclosure form to the applicant at the time the policy is delivered, with a notice that a full premium refund shall be received if the policy is returned to the company within the free look period. Insurers shall provide a ten day free look period for individual contracts in compliance with Ark. Code Ann. §23-79-112 (f)."

Arizona: "Annuity purchasers age 65 or older on the date of application now have a 30 day “free look period” (increased from 10 days). This means the applicant has 30 days to review the annuity and return it without penalty for any reason within the “free look period.” This provision 2 took effect 9/18/03"

California defines Free Look as "The right of the policy owner to have a period of ten or more days to examine an insurance policy and, if not satisfied, return it to the company for a full refund of all amounts paid."

The Colorado Free Look:  "...a free look period of no less than fifteen (15) days shall be provided for the applicant to return the annuity contract without penalty."

Florida defines Free Look " An unconditional refund for a period of at least 14 days once the life insurance contract is delivered. The free look period for a life insurance policy issued before 1/1/2009 was 10 days. The Variable Life policies do not have a free look period."

Georgia Free Look is defined in the state code as: "Free Look" provision must be included in every plan. The free look allows you at least 10 days to change your mind even after you have signed the contract with the insurance company and received all policy documents. Some companies may give a free look for up to 30 days when purchasing a Georgia Life plan."

Indiana: "10-day free look period. The policy can be returned to the company or the agent through whom it was purchased. The provision must be on the front cover."

Kentucky Free Look Provision: "There shall be a provision relating to the time and place of payment of premiums...within a period of not less than 10 days after its receipt to the company or to the agent through whom it was purchased. Immediately upon any such delivery, or mailing, of the policy to the company or agent, the policy will be deemed void from its inceptions and any premium paid for such policy shall be promptly returned to the policy owner by the company."

Louisiana: "Louisiana law allows you a 10-day “free look” period to decide whether to keep a life insurance policy."

Massachusetts defines Free Look as thus:"The time period after a life insurance policy or an annuity is delivered during which the policy owner may review it and return it to the company for a full refund of the initial premium."

Michigan's Free Look Provision: "The "free look" period begins from the date that you, the purchaser, receive the annuity contract. Michigan law requires most annuity contracts delivered or issued for delivery in this State to provide a "free look" period of at least ten days during which you may cancel the contract without paying any surrender charges and receive a refund of any premium paid for the contract, including any policy fee or other charges. "

About Minnesota's Free Look: "Many states have laws that give you a set number of days to look at the annuity contract after you buy it. If you decide during that time that you do not want the annuity, you can return the contract and get all your money back. This is often referred to as a free look or right to return period. The free look period should be prominently stated in your contract. Be sure to read your contract carefully during the free look period."

Montana: "a free look period of no less than 15 days shall be provided for the applicant to return the annuity contract without penalty."

New Hampshire: "This policy may, at any time within 10 days after its receipt by the policyholder, be returned by delivering it or mailing it to the company or to the agent through whom it was purchased. Immediately upon delivery or mailing, the policy will be deemed void from the beginning, and any premium paid on it will be refunded."

New Jersey: "All contracts must include a provision or an attached notice providing a minimum 10-day period after the date of receipt of the annuity by the initial owner within which the owner may cancel the annuity and providing that the cancelling owner shall “receive from the insurer a prompt refund of any account value of the annuity, including any contract fees or other charges, by mailing or otherwise surrendering the annuity, together with a written request for cancellation.” The Department suggests that this provision or notice contain the quoted language verbatim."

New York: "New York requires a minimum free look period of 10 days and a maximum of 30 days. "

North Carolina: "Keep in mind that you have a minimum 10-day “free look” period on new policies and a minimum 20 day “free look” period on replacement policies, in case you change your mind."

South Dakota: "Every individual life insurance policy issued for delivery in South Dakota on or after July 1, 1982, by an insurance company or fraternal benefit society, shall have a notice printed on or attached to the face page of the policy, stating in substance that the person issued the policy is permitted to return the policy, with a written request for cancellation within ten days of its actual receipt by the purchaser, and to have the premium paid refunded if, after examination of the policy, the purchaser is not satisfied with it for any reason. If a policyholder or purchaser, pursuant to the notice, returns the policy to the company or fraternal benefit society at its home or branch office or to the insurance producer through whom it was purchased, it is void from the beginning and the parties are in the same position as if no policy had been issued."

Texas: " Texas policies will give you a free-look period of at least 10 to 20 days. During this time, you may cancel the policy for any reason and get a full refund. Use this time to read your policy carefully to be sure the coverage is right for you."

Vermont Free Look: "Under the law, you have the right to return the policy to the insurer, for any reason -- and get your money back -- as long as you do so within the required time periods. If the new policy you buy replaces an older policy you bought earlier, you have 30 days to return it free of charge. If the new policy does not replace an older policy, you have 10 days. During this period, read the policy carefully. If you decide you do not want to keep it, you can return it for a refund of the premium you already paid and the policy will be considered void from the beginning."

A free look provision is a very valuable consumer right.  However it is not a license to purchase life insurance and annuity products just because you can buy it now and cancel it later.  Yes it is true that you will be able to cancel it within the given time frame, however if you fail to do so - likely you will have no recourse.

A free-look provision does not give you permission to sign life insurance documents that you do not understand, just because you can cancel it later.

A free-look period is not license to lie or make misstatements on your life insurance application because the policy can be cancelled.

The moment that you think you may want to return the life insurance policy.  Contact your insurance company directly.   Remember the clock is ticking.  Have your full name, social security number, date of birth, and policy number handy. Right down the name of the person that you are dealing with along with a date and time.   Request that they send you a notification of the receipt of the phone call.  If the initial employee is unhelpful ask to speak with a manager.  You may need to submit a signed letter.

If you have any issues, look through the free look provision provided in your life insurance or annuity policy.   Furthermore - contact your state insurance regulator.

If you are cancelling your policy via the free look provision and are doing so because you felt intimidated by the agent, it may not be a good idea to contact the insurance agent.  Rather deal directly with the insurance company.  You need only deal with the actual insurance company.

Follow up with the insurance company to confirm that you receive both an official notification and your full refund.

The free look provision is a super helpful consumer protection.   The provision does not deal with property or causality insurance, rather only with life insurance and annuities.  The exact details of your free look provision are governed by our state insurance regulator.  Commonly the time frame is between 10 to 30 days after the policy inception.  Do do not buy a life insurance policy because you can cancel it at some given time, we suggest that you only buy a term or whole life insurance policy when you need one and can afford the yearly policy premiums.