A annuity is a financial product that provides a series of regular payments, usually for a fixed period or for life. It is often used to generate income in retirement.

But before you finalize the terms of your annuity contract, you have a special window to review the terms of your investment in more detail.

Each state insurance department sets its own minimum requirements for free consultation periods. In this article, we’ll explore each state’s standards so you can make the most of this time.

What is a research period without annuity?

A free consultation period is an important deadline provided by annuity companies to give potential buyers the opportunity to carefully review their contract.

This period – which generally lasts at least 10 days but varies by state – provides a final opportunity to determine whether an annuity fits your financial goals. If you are not satisfied with the contract, you can cancel it within this period and get a full refund.

Your free search period begins when you receive your annuity contract. To make an informed decision, start reviewing this document as soon as you receive it. Annuities can be complex, so consider seeking advice from a lawyer, financial advisor or a tax professional during your free consultation period.

Minimum Free Posting Requirements by State

The amount of time you have to review your annuity contract depends on the state in which you live. Although insurance companies may offer you more time to review your contact, all companies must give you at least the minimum number of days required by state law.

The majority of states give you 10 days to review the contract, and some offer more time to review a replacement annuity. Other states – 13 in total – only require insurers to give you a free consultation period if you haven’t received a buyer’s guide and informational materials before receiving the contract.

Here’s how the non-annuity seeking periods break down for each state.

Why is a pension-free research period important?

The free review period is your last chance to evaluate an annuity and cancel the contract before the terms become legally binding. After the end of the period, cancellation or withdrawal may result in high redemption fees and penalties.

The free consultation period is designed to protect you and your financial interests. This is important because some annuities require significant initial investments on your part. Immediate annuitiesfor example, are relatively simple and straightforward, but may require a lump sum of $100,000 or more to generate significant income in retirement.

In the meantime, variable annuities may allow for a series of deferred payments over time, but the contract language and how the annuity generates returns can be extremely complicated. Many variable annuities have numerous fees and eligibility requirements, so you may need a few days to review them in depth.

Finally, whatever the type of annuity, it is generally very difficult to withdraw your money once you start receiving payments from the insurer.

Although you can withdraw a small portion of the principal each year without fees, you cannot liquidate the annuity easily as you can with stocks or other investments in your brokerage account. Not only will you pay ordinary income taxes on some or all of the money you withdraw, but you will also face surrender charges or withdrawal penalties, making access to your money not only difficult but expensive.

The free review period is important because you want to make sure the purchase of an annuity fits your retirement finances. Otherwise, you could find yourself stuck in an investment that you don’t understand or that doesn’t offer the benefits you thought it would.

Conclusion

The free review period provides more time to carefully review an annuity contract and make an informed decision. If in doubt, do not hesitate to contact the insurance company or seek help from a financial advisor. There aren’t many second chances when it comes to finance, so use this time wisely and make sure the annuity truly meets your needs.