Surrender periods can vary from 3 years to 10 years in length, which can limit investment flexibility. Client circumstances may change, so we’ve worked with insurance companies and selected variable annuities for the RetireOne™ platform that do not assess surrender penalties. We pride ourselves on developing and carrying products that maximize flexibility.
Please note that because fixed indexed annuities do not charge explicit fees to own the investments, they may include surrender penalties in their pricing structures. Most of these investments allow for annual withdrawals of up to 10%, without penalty. Any withdrawal over the annual allowable amount may be subject to a penalty until the investment is held beyond the surrender penalty period.
These surrender penalties are calculated to decrease annually, until the insurance company issuing the contract is able to recoup the acquisition costs. When researching these kinds of investments for clients, advisors should know how long their clients intend to hold the investment, be aware of when and how these surrender penalties are assessed, and understand what their client’s liquidity needs may be during the surrender period.