What are surrender charges?

Surrender charges apply when you take more than the allowable amount out of your annuity. With most contracts there is a surrender charge schedule that outlines what the percentage penalties are in each contract year. Remember, there can also be a Market Value Adjustment applied to withdrawals in excess of the allowable amount.","example":"\Example: Suppose a $12,000 from a $50,000 contract: Policy Year: 4 Free Withdrawal: $50k x 10% = $5k Amount Subject to charge: 12k - 5k = 7k Charge in %: 7% Charge Amount will be $490","reminder":"\Reminder: -Surrender Charge (penalty) is expressed as a percentage (%) on excessive withdrawals \n -Surrender charges are only imposed if you give up the annuity before the surrender period, which means that you can avoid the fee by holding it past that period