A certain scenario may arise where you might be required to get out of an annuity contract after you purchase it. In such cases, it will be said that you have decided to surrender annuity. Most insurance companies will charge a certain fee in a surrender annuity case within the first 7 or 8 years of buying it. This means, the shorter amount of time you have held the annuity before your surrender it, the more you will be charged.
In some cases, the person holding the annuity might have to withdraw some of the money before the surrender period. Some insurance companies would allow the person to take a small a part of their investment during this period (usually around 10% to 15%) depending upon the seriousness of circumstances.
Reasons like a serious illness or some kind of a disability are considered under this option. Once the surrender period gets over, the person is allowed to withdraw as much of the annuity amount as they wish to. But still, any early withdrawal of the annuity before the age of 59½ will be charged with a penalty of 10 percent tax.
The surrender annuity value of a contract is the total of the annuity account that the person holds at a given point if time from which the surrender charge will be deducted if the account is withdrawn before time. Thus, in order to calculate how much money you would get if you surrender your annuity all you have o do is minus the surrender annuity amount from your total annuity balance.
Things To Keep In Mind Before Surrendering Your Annuity
Surrender charges for an annuity are quite high. This is because insurance company expects the annuity to be a long term investment and if you surrender it before time; league of legends surrender at 20 they are bound to charge you high rates. They will mean a considerable deduction in your annuity amount at the time of closing your account.
The longer the annuity is valid, the lesser will be the surrender charge. Thus, it is always advisable to put off surrendering your annuity as much as you can. Even a few months of waiting can make a difference of thousands of dollars in your surrender annuity amount. It is best to wait till the annuity anniversary date before surrendering.
A large number of people are not aware of the fact that surrender charges will be cut if they withdraw their annuity before the fixed date. It is important to know about all the clauses and rules regarding your annuity before actually undertaking an annuity. You should be aware that an annuity agreement entails several clauses and regulations that you should be fully aware off.
Most annuity agreements will display the surrender charge in case the annuity is surrendered before time. The surrender charge will usually vary from year to year and the surrender annuity amount will be calculated after deducting the surrender charge from the annuity balance. Thus, be aware of the surrender charge that will be charged before canceling your annuity account.