What is Annuity Surrender Value?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Annuity surrender value is the amount of money an annuity holder can receive if they decide to terminate their annuity contract before the maturity date or before the annuity begins making payments.

Examples of Annuity Surrender Value

  1. fixed annuity: If you invested $100,000 in a fixed annuity, and the surrender value after five years is 90% of the invested amount, the surrender value would be $90,000.
  2. Variable Annuity: For a variable annuity with an initial investment of $50,000 that has grown to $60,000, if the surrender charge is 10%, the surrender value would be $54,000.

Factors Influencing Annuity Surrender Value

  1. Initial Investment Amount: The amount you initially invest in the annuity.
  2. Surrender Period: The time frame during which surrender charges apply.
  3. Surrender Charges: Fees charged for withdrawing money before the end of the surrender period.
  4. Interest Rates or Investment Performance: In the case of variable annuities, the performance of the chosen investment options.

Annuity Surrender Value Components

ComponentDescriptionExample
Initial InvestmentThe initial amount invested in the annuity.$100,000
Surrender PeriodTime frame with surrender charges.5 years
Surrender Charge RatePercentage charged for early withdrawal.10%
Investment PerformanceGrowth or decline in the value of the annuity.6% annual growth rate
Surrender Value CalculationCalculation method for the surrender value.90% of current value

Conclusion

The annuity surrender value is crucial for understanding your potential financial return or loss if you decide to terminate your annuity early. It is influenced by your initial investment, the surrender period, any applicable charges, and the performance of your investment. Understanding these factors can help in making informed decisions about your annuity investment. 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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