Do You Lock Up Your Money in an Annuity?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Annuity Lock-Up

Annuities are financial products that can provide income, typically for retirement. However, not all annuities require locking up your money. The type of annuity determines the liquidity of your funds.

Types of Annuities and Their Liquidity

  1. Single-Premium Immediate Annuities (SPIAs) and Qualified Longevity Annuity Contracts (QLACs): These require you to lock up your money. Once you pay the premium, you start receiving income, but you generally cannot withdraw the principal.
  2. Fixed, Fixed Indexed, and Variable Annuities: These do not require you to tie up your money permanently. They offer annual liquidity provisions:
    • Penalty-Free Withdrawals: Allows limited withdrawals without penalties.
    • Crisis Waivers: Provide access to funds under specific circumstances like a medical emergency.
    • Liquidity Post-surrender period: After the surrender period, the investment and interest become fully liquid.

Annuity Types and Liquidity Features

Annuity TypeLiquidity ProvisionLock-Up Requirement
Single-Premium ImmediateNoneYes
Qualified Longevity AnnuityNoneYes
Fixed AnnuityPenalty-Free Withdrawals, Crisis WaiversNo (Post-Surrender)
Fixed Indexed AnnuityPenalty-Free Withdrawals, Crisis WaiversNo (Post-Surrender)
Variable AnnuityPenalty-Free Withdrawals, Crisis WaiversNo (Post-Surrender)


Choosing the right annuity depends on your financial goals and need for liquidity. While SPIAs and QLACs require locking up your money, fixed, fixed indexed, and variable annuities offer more flexibility with liquidity options. Understanding these differences is crucial for making informed financial decisions. Contact us today for a free quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, 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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