Annuities
A surrender charge is a fee an insurer deducts when an annuity or permanent life policy is cashed in, or more than the free-withdrawal amount is taken, during the early years of the contract. It is usually a percentage that declines each year until it disappears at the end of the surrender period.
Surrender charges let insurers pay commissions and offer better rates up front, but they are also the most common source of annuity complaints. State best-interest rules expect the producer to consider the client's liquidity needs and any charges triggered by replacing an existing contract.
Both annuity accumulation calculators define the term. The variable annuity calculator lets the visitor enter a Surrender Charge (%) and shows the resulting Surrender Value, which makes the liquidity trade-off visible before any recommendation is made.
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