Direct answer
Surrender charges for a fixed annuity are typically calculated as a declining percentage of the withdrawn amount over a set period, such as 7-10 years, meaning the penalty is highest in the first year and decreases annually. It depends on the specific contract schedule and whether your withdrawal exceeds the penalty-free allowance, which is often 10% of the account value per year.
Standard annuity disclosure documents and contract specimen forms issued by life insurance companies. For additional information about how surrender charges and other contract provisions function, see the Investor.gov guide to annuities.
What this means for you
Surrender charges for a fixed annuity are typically calculated as a declining percentage of the withdrawn amount over a set period, such as 7-10 years, meaning the penalty is highest in the first year and decreases annually. It depends on the specific contract schedule and whether your withdrawal exceeds the penalty-free allowance, which is often 10% of the account value per year.
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