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Episode 12: Never Give Up, Never Surrender – The Truth About Surrender Penalties

Jun 24, 2019

Nate talks surrender penalties in part 4 of his annuity series called, “Cutting through the crap!”

Here are just a handful of the things that we'll discuss:

  • Definition of surrender penalties and surrender schedules
  • What does the industry say about surrender penalties?
  • Is perfect liquidity a possibility?
  • How much liquidity does someone actually need in retirement?
  • What situations would cause a need for more liquidity?
  • An extreme example of the highest surrender penalties and surrender schedule out there, and what would happen if you did actually pay those penalties. How does the math actually work?
Liquidity is generally in the form of policy loans and withdrawals. Policy loans are subject to interest charges. Adverse tax consequences may result if withdrawals exceed premiums paid into the policy. Withdrawals or surrenders made during a surrender charge period will be subject to surrender charges and may reduce the ultimate death benefit and cash value. Annuities are insurance contracts designed for retirement or other long term needs.  They provide guarantees of principal and credited interest, subject to surrender charges. Annuity guarantees and protections are backed by the financial strength and claims paying ability of the issuing insurer.

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