Surrender Charges

Surrender charges are fees that insurance companies impose if you cancel or withdraw funds from a fixed or variable annuity contract within a certain period, typically the first several years. These charges compensate the insurer for upfront costs and commissions associated with establishing your policy. The fee usually decreases over time and is designed to discourage early termination. Once the surrender period ends, you can access your funds without penalty. Understanding these charges helps you evaluate whether an annuity fits your financial plans, especially if you might need liquidity in the short term.