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Surrender Charge on an Annuity
Old 06-24-2008, 08:54 PM   #1
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Surrender Charge on an Annuity

Do all fixed annuities have a surrender charge if cashed in before maturity date?
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Old 06-25-2008, 08:38 AM   #2
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Dunno about all, but certainly the vast majority do. Don't think I have ever seen one without a surrender charge.
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Old 06-25-2008, 08:48 AM   #3
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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.
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Old 06-25-2008, 09:45 AM   #4
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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
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surrender charges
Old 06-25-2008, 12:14 PM   #5
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surrender charges

They typically have surrender charges during the "surrender period" which is not the same as maturity date.
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Old 06-25-2008, 12:24 PM   #6
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Originally Posted by jhandley View Post
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........
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Old 06-25-2008, 12:25 PM   #7
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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?
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Old 06-25-2008, 12:30 PM   #8
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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............
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Old 06-25-2008, 12:34 PM   #9
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Thanks FD, you guys listening out there?
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Old 06-25-2008, 12:43 PM   #10
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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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Old 06-25-2008, 12:46 PM   #11
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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.
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Old 06-25-2008, 12:48 PM   #12
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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..........
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Old 06-25-2008, 12:49 PM   #13
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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........
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Old 06-25-2008, 12:53 PM   #14
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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.
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Old 06-25-2008, 12:58 PM   #15
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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??
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Old 06-25-2008, 01:20 PM   #16
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Which company??
I filled you in via PM
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Old 06-25-2008, 07:34 PM   #17
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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.
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