If you are looking at investing into an annuity you may have heard the term surrender penalty thrown around a few times. In fact you may not be clear exactly what it is and how it could affect you.
In this article you will learn what an annuity surrender penalty is and how to deal with them.
What Is A Surrender Penalty
First off, what is an annuity surrender penalty? This is a penalty to protect the company from having people cash out their annuities. Typically annuity companies will have fees they need to collect on policies but usually they are spread out over a long period of time, this way they don’t have to collect all the fees up front.
If someone were to cash out their policy before they were able to collect on all of the fees the insurance company would lose out, so they have a surrender penalty in place just in case someone does decide to close their account. Read the rest of this entry
