Annuity Quotes Online Philadelphia Pennsylvania PA

Reader’s Question:

They say that when withdrawing funds from annuity in Philadelphia Pennsylvania PA, I will be charged a surrender fee. How true is this? Isn’t annuity supposed to be an income that I can use up? Why still charge a surrender fee?

Carlos

Philadelphia, PA

Hello Carlos,

It’s obvious that you are confused with surrender fee in annuity. Actually, the surrender fee is applicable to deferred annuity only because the immediate annuity has fixed income starting a year after your purchase payment. The surrender fee is referred to withdrawal charge in deferred annuity. The amount of surrender fee depends on the year that you make the withdrawal. The withdrawal fee is 7 percent to 1 percent starting the first year after you purchased the annuity up to the 7th year of annuity (meaning 7% for 1st year of purchase, 6% of 2nd years of purchase, 5% of 3rd year of purchase and so on).

Yes your right that annuity is supposed to give you income. However, the income will increase after the 8th year that’s why in this period, there is no surrender fee required. The earlier you withdraw the deferred annuity, the higher the percentage of fee. This is because by then the insurance company has not coped up with commissions and other expenses yes on the early stage of annuity. It is until the 8th year that the annuity has accumulated interest and is fully recovered to provide income.

The idea of surrender fee is to discourage the person to withdraw at the early stage of annuity. As much as possible, the annuity must be allowed to accumulate. There are however insurance companies that offer annuities that do not require surrender fee. You may want to find out from the different insurance companies in Philadelphia Pennsylvania PA if they offer such. Start by requesting annuity quotes in this site and you will know the companies that offer annuity. From there you can contact them directly if you want to inquire about no-surrender fee policy in deferred annuity.

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