Annuity glossary

Surrender Charge

A penalty the insurance company deducts if you withdraw more than your contract allows, or cash out entirely, during the early years of an annuity or permanent life policy. The charge typically follows a declining schedule over roughly seven to ten years, then disappears. It exists to recover the insurer's upfront costs of issuing the contract. The contract explains the calculation, timing, exceptions, and owner choices that apply.

Any guarantee is backed by the claims-paying ability of the issuing insurer.