Most annuities allow you to cancel your contract before the term is up, but at the end of the day, annuities are long-term contracts.
Can I Cancel My Annuity?
Most annuities allow you to cancel your contract before the term is up, but annuities are long-term contracts at the end of the day.
To get out of your contract early, you have to pay the price, so here are your options:
Deferred Annuity Contracts
Deferred contracts consist of fixed, fixed indexed, variable, and DIA/QLAC (pre-annuitization) contracts.
The annuity company will pay you the Cash Surrender Value.
The Cash Surrender Value is equal to the greater of
- The Accumulated Value less any applicable Withdrawal Charges, plus or minus any applicable Market Value Adjustments less any applicable Premium Bonus Vesting Adjustments; or The Minimum Guaranteed Value.
What Does This Mean?
Basically, this means if you cancel your contract before the agreed term is completed, naturally you would have to accept:
- Penalties
- Accept any MVA changes
- Receive a “pro-rated” premium bonus
Immediate Contracts and After Annuitizing
If you purchase an immediate annuity or have annuitized a contract, your policy may not be terminated or changed in most scenarios.
Commutation Withdrawal Benefit
However, some products allow a Commutation Withdrawal, which basically is a “one-time” withdrawal from your current contract’s value in case of emergency.