Fees for Index Annuities

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Surrender Charges

Surrender charges in index annuities are fees incurred when you withdraw funds before the end of your contract term. These charges typically decrease annually.

Example: A 10-year annuity might start with a 10% surrender charge, decreasing by 1% each year.

Optional Fees for More Upside Potential

Paying additional fees can increase the potential return of your index annuity. These fees are for enhanced participation rates or caps.

Example: Paying an extra 1% annually might increase your participation rate from 50% to 75%.

Optional Fees for Lifetime Income Riders

Lifetime income riders guarantee a certain income for life. The fee for this rider is usually a percentage of your account value.

Example: A 0.95% annual fee on the account balance ensures a lifetime income stream.

Optional Fees for Enhanced Death Benefits

These fees provide beneficiaries with greater benefits upon the annuitant’s death. The fee is often a percentage of your account value.

Example: An additional 0.5% fee might ensure your beneficiary receives the higher account value or total premiums paid.

Fees For Index Annuities

Optional Fees for Long-Term Care Riders

Long-term care riders cover certain long-term care expenses. The fee is usually a percentage of your account value.

Example: Paying a 0.6% annual fee provides a long-term care benefit of up to twice your account value.

Optional Fees for Larger Bonuses

Paying extra fees can result in higher upfront bonuses added to your annuity balance.

Example: An additional 2% fee might secure a 10% upfront bonus instead of the standard 5%.

Optional Fees for More Liquidity

Extra fees can increase liquidity options, such as higher free withdrawal amounts.

Example: Paying an additional 0.3% could increase free withdrawals from 10% to 15% of the account value per year.

Fee Comparison

Fee TypeTypical RateBenefit Offered
Surrender Charges10% decreasingWithdrawal penalty reduction over time
Upside Potential1% annuallyHigher participation rates or caps
Lifetime Income Riders0.95% of balanceGuaranteed lifetime income
Enhanced Death Benefits0.5% of balanceGreater benefits for beneficiaries
Long-Term Care Riders0.6% of balanceLong-term care expense coverage
Larger Bonuses2% additionalHigher upfront bonuses
More Liquidity0.3% additionalIncreased free withdrawal amounts


Index annuities offer various optional features, each with associated fees. These include surrender charges for early withdrawals, fees for enhanced upside potential, lifetime income, death benefits, long-term care coverage, larger bonuses, and increased liquidity. Understanding these fees helps in optimizing annuity benefits according to your needs.

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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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