Annuity Surrender Period

Shawn Plummer

CEO, The Annuity Expert

What is an Annuity Surrender Period?

An annuity surrender period is a specific time frame during which an annuity owner faces penalties for withdrawing funds from the annuity. The annuity contract sets this period and varies between different contracts.

Examples and How it Works

  • Example 1: A 7-year surrender period annuity charges a 7% penalty if you withdraw in the first year, decreasing by 1% each year.
  • Example 2: A 10-year surrender period with a flat 10% penalty for any withdrawal before the period ends.
Annuity Surrender Period

Impact on Annuity Owners

During this period, withdrawing more than a certain percentage (often 10%) of the annuity’s value results in a surrender charge. This penalty decreases over time. If you withdraw funds before the surrender period ends, you face the surrender charge and potential tax penalties if you’re under age 59½.

Annuity Surrender Periods and Charges

Year of WithdrawalSurrender Charge (%)
17
26
35
44
53
62
71
8+0

Conclusion

Understanding the annuity surrender period is crucial for annuity owners. It ensures that you know potential penalties and can plan your finances accordingly. Knowing when the surrender period ends and the charges involved helps make informed decisions about your investment. Contact us today for a free quote.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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