Annuities typically have a 10 year surrender period. But unlike a bond, the annuity doesn't mature or expire. Rather, you're simply provided more flexibility when the period ends.
The surrender period is the length of time you are required to hold your annuity before you can withdraw funds without incurring surrender charges. During this period, if you withdraw more than the penalty-free amount (usually up to 10% of the accumulation value annually), you may be subject to surrender charges, which are fees assessed on the amount withdrawn.
These charges typically decrease over time and reach 0% after a certain number of years, depending on your state and the specific terms of your annuity contract.
The surrender period is one of the core provisions that allow an insurer to offer the benefits of an annuity.
Annuities typically have a 10-year surrender period, but unlike a bond, the annuity doesn't mature or expire.. Rather, you're simply provided more flexibility when the period ends. Most annuities won't forcibly convert to a stream of payments until the owner's 100th or 115th birthday.
After the surrender period, you can withdraw all funds from your annuity without incurring surrender charges.
We often see younger customers continue to hold the annuity to benefit from ongoing compounding. With those approaching retirement and in need of income, we recommend considering swapping into an income-focused annuity and out of a growth annuity after the surrender period.
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