Surrender Charge on an Annuity

jhandley · 06-24-2008, 07:54 PM

Do all fixed annuities have a surrender charge if cashed in before maturity date?

brewer12345 · 06-25-2008, 07:38 AM

Dunno about all, but certainly the vast majority do. Don't think I have ever seen one without a surrender charge.

73ss454 · 06-25-2008, 07:48 AM

I would think that they do, and here's why.

They want to make sure if you wake up during the term of the annuity that if you want out they get to rip you off again.

haha · 06-25-2008, 08:45 AM

Quote:

I would think that they do, and here's why.

They want to make sure if you wake up during the term of the annuity that if you want out they get to rip you off again.

Mr handley, you perhaps don't yet know that "annuity" is a very bad word around here.

Ha

bcarrell · 06-25-2008, 11:14 AM

They typically have surrender charges during the "surrender period" which is not the same as maturity date.

FinanceDude · 06-25-2008, 11:24 AM

Quote:

Originally Posted by jhandley

Do all fixed annuities have a surrender charge if cashed in before maturity date?

Most annuities don't have a "maturity date", just a "surrender period". It depends on your contract.

Contrary to popular belief, you can buy annuities with NO surrender charges, but most agents won't tell you that........

73ss454 · 06-25-2008, 11:25 AM

Quote:

Originally Posted by FinanceDude

Most annuities don't have a "maturity date", just a "surrender period". It depends on your contract.

Contrary to popular belief, you can buy annuities with NO surrender charges, but most agents won't tell you that........

Why?

FinanceDude · 06-25-2008, 11:30 AM

Quote:

Originally Posted by 73ss454

Why?

Well, they make a LOT less money if they do so. Annuities have different "share classes". Here's an example:

No surrender: Agent gets nothing up front but 1% a year trailing income from day one

Short surrender: (4 year surrender schedule) Agent gets 4% upfront and a .50% trail starting in the 3rd year

"Normal surrender" (7 year surrender schedule) Agent gets 6-7% upfront and either no trail or .25% after the 7th year.

Since most newer agents are under pressure to get "numbers" they stick with the 7-year products, not even mentioning other options............

73ss454 · 06-25-2008, 11:34 AM

Thanks FD, you guys listening out there?

bcarrell · 06-25-2008, 11:43 AM

It's my understanding that all annuities, variable and fixed, have a "maturity date" or "income date". Usually means the date at which income payments are scheduled to begin unless you annuitized the contract prior to that date.

**Marquette** · 06-25-2008, 11:46 AM

You could perhaps see if there's a class-action against your carrier and then see if you can leverage that to get out of your contract without the surrender charge.

FinanceDude · 06-25-2008, 11:48 AM

Quote:

Originally Posted by Marquette

You could perhaps see if there's a class-action against your carrier and then see if you can leverage that to get out of your contract without the surrender charge.

Doubtful, those actions are few and far between..... What we DON'T know is when the annuity was purchased. The surrender charge goes down each year. In addition, there's a "free amount" that increases over time that can be moved without penalty.

OP needs to provide more info to get more help..........

FinanceDude · 06-25-2008, 11:49 AM

Quote:

Originally Posted by bcarrell

It's my understanding that all annuities, variable and fixed, have a "maturity date" or "income date". Usually means the date at which income payments are scheduled to begin unless you annuitized the contract prior to that date.

In the "old days", that was true. However, due to changes, "forced annuitization" clauses have be challenged in courts, and the investor has won virtually all of those cases........

**Marquette** · 06-25-2008, 11:53 AM

Quote:

Originally Posted by FinanceDude

Doubtful, those actions are few and far between..... What we DON'T know is when the annuity was purchased. The surrender charge goes down each year. In addition, there's a "free amount" that increases over time that can be moved without penalty.

OP needs to provide more info to get more help..........

Sorry, I should probably have put a smiley along with that one... it was mostly tongue-in-cheek, although we're wading through a class-action and a state-filed suite right now.

That's a very good point about the charges though. We don't know when it was bought, what the terms are, or if it's even in a free look period right now.

FinanceDude · 06-25-2008, 11:58 AM

Quote:

Originally Posted by Marquette

Sorry, I should probably have put a smiley along with that one... it was mostly tongue-in-cheek, although we're wading through a class-action and a state-filed suite right now.

Which company??

**Marquette** · 06-25-2008, 12:20 PM

Quote:

Originally Posted by FinanceDude

Which company??

I filled you in via PM

cute fuzzy bunny · 06-25-2008, 06:34 PM

Quote:

Originally Posted by haha

Mr handley, you perhaps don't yet know that "annuity" is a very bad word around here.

Ha

Hey, I like annuities and insurance companies!

Medium-rare.

06-24-2008, 07:54 PM	#1
jhandley Confused about dryer sheets Join Date: Jun 2008 Posts: 3	Surrender Charge on an Annuity Do all fixed annuities have a surrender charge if cashed in before maturity date?

06-25-2008, 07:38 AM	#2
brewer12345 Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Mar 2003 Posts: 9,151	Dunno about all, but certainly the vast majority do. Don't think I have ever seen one without a surrender charge. __________________ "When caught between two evils I generally pick the one I haven't tried before." - Mae West "If dogs weren't meant to eat dental floss out of the garbage, why do they make it mint-flavored?"

06-25-2008, 11:14 AM	#5
bcarrell Confused about dryer sheets Join Date: Jun 2008 Posts: 2	surrender charges They typically have surrender charges during the "surrender period" which is not the same as maturity date.

06-25-2008, 11:46 AM	#11
Marquette Moderator Join Date: Jan 2008 Location: Planet Y Posts: 1,843	You could perhaps see if there's a class-action against your carrier and then see if you can leverage that to get out of your contract without the surrender charge. __________________ What's this button do?

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06-25-2008, 07:48 AM	#3
73ss454 Thinks s/he gets paid by the post Join Date: Oct 2004 Posts: 1,706	I would think that they do, and here's why. They want to make sure if you wake up during the term of the annuity that if you want out they get to rip you off again.

06-25-2008, 11:34 AM	#9
73ss454 Thinks s/he gets paid by the post Join Date: Oct 2004 Posts: 1,706	Thanks FD, you guys listening out there?

06-25-2008, 11:43 AM	#10
bcarrell Confused about dryer sheets Join Date: Jun 2008 Posts: 2	It's my understanding that all annuities, variable and fixed, have a "maturity date" or "income date". Usually means the date at which income payments are scheduled to begin unless you annuitized the contract prior to that date.

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