Do All Annuities Have Surrender Charges?
The Annuity Man
The stupid and uneducated mantra of "I Hate Annuities" falls under the false assumption that "annuities" represent only one strategy. Not!
There are many consumer annuity types. Single Premium Immediate Annuities (SPIAs), Deferred Income Annuities (DIAs), Qualified Longevity Annuity Contracts (QLACs), Fixed Index Annuities (FIAs), Multi-Year Guarantee Annuities (MYGAs), and Variable Annuities (VAs). There are also Charitable Gift Annuities (CGAs) as well.
All have unique benefit propositions and limitations. All solve for a specific contractual goal. For example, SPIAs-DIAs-QLACs are all strategies that can provide a lifetime income stream. There are no surrender charges, and the contracts are irrevocable. In other words, you will get your money back...but it will be in payment form. You can't pivot and cash them in.
FIAs-MYGAs-VAs are all deferred annuities and have surrender charges for a specific period of time. You can choose how long you want to lock the money in based on the product offerings and the specific contractual goals that you are trying to achieve. Surrender charges decline over time. For example, a 5 year surrender charge MYGA might have a declining surrender charge of 9%, 8%, 7%, 6%, and 5% over the duration of that 5 year policy.
So the bottom line is that not all annuities have surrender charges and not all annuities are the same. By the way, your Social Security payment is an annuity. Hate all annuities now?
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