Annuity Surrender Periods and Liquidity

Understand surrender charges, withdrawal provisions and liquidity before purchasing an annuity.

The planning principle

Many annuity contracts impose surrender charges for withdrawals above permitted amounts during an initial period. That makes liquidity analysis essential before purchase.

What to review

Keep sufficient liquid assets outside the contract for foreseeable expenses and review the exact surrender schedule, free-withdrawal provision and any market value adjustment.

Reference points

• Surrender schedule: charges commonly decline over a stated number of contract years.
• Free withdrawals: many contracts permit limited annual withdrawals without surrender charges, subject to contract terms.
• Market value adjustments: some products may adjust withdrawal or surrender values based on interest-rate conditions.
• Liquidity reserve: money needed for near-term expenses generally should not depend on penalty-free access from an annuity.

Educational information only. This page is not tax, legal, investment, or individualized insurance advice. Insurance products are subject to eligibility, underwriting, carrier availability, policy terms and state requirements.