Surrender Penalties
Fixed-Indexed Annuities can have level or decreasing surrender charges for each full term of up to 15 years or more. One of the major benefits to a surrender charge period is that it is designed to help protect an insurer from a “run on the bank”. By its mere existence, a surrender charge period encourages people to remit the right type of money to the insurer, intermediate and long term.

The end result is that the surrender charge period gives an insurer the opportunity to invest more appropriately.

The importance of your client not placing all of their money into a Fixed-Indexed Annuity or into any product or concept is always important. If your client diversifies, your client often wins and the insurer often wins. And, you win since a highly diversified client is usually the easiest to please.

When an emergency arises, one should go to their money market account first. If they still need more money, they should then turn to their passbook savings. If more money is needed, they should then withdraw 10% of their annuity value from their traditional fixed annuity. And, if even more money is needed, they should then rely on their 1-yr CD or 10% of their annuity value from their Fixed-Indexed Annuity.