A 65-year-old California consumer purchases a VARIABLE annuity. When she returns the contract within the senior free-look period, what is the insurer required to refund?
Explanation
Under California Insurance Code §10127.10, the 30-day senior free-look applies to individual life AND annuity contracts (including variable annuities) issued to persons age 60 or older. Variable annuities raise a unique issue: subaccount investment performance could create a refund-value mismatch. California regulations and most carrier filings respond by either (1) refunding the contract VALUE (which may be more or less than premium) and/or (2) requiring that premium during the free-look be allocated to a stable money-market subaccount so that the consumer receives a full premium refund. Option A overstates the simple premium-refund rule for variable products. Option C fabricates a 50% rule. Option D is wrong; variable annuities are NOT exempt — they are covered by both California free-look rules and federal SEC/FINRA rescission rights.
Law Reference: California Insurance Code §10127.10 (senior life/annuity free-look)Practice all 315 questions free — no signup required.
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