HELP! I’M RUNNING OUT OF MONEY
on a declining scale basis. For example, you purchase an annuity for $100,000. This annuity’s surrender charge schedule is for 10 years. (See Table 6.1).
General Surrender Charge Schedule for Annuities 1
Surrender charges disappear
After the tenth year, you would be able to draw out as much of the contract’s value as you wished. This is actually a contingent deferred sales charge, since it isn’t levied unless you pull out more than the allowable maximum. More commonly, though, it is called a “back-end load.” Back-end loads are designed to discourage the annuity owner from transferring his or her money to a different company, or taking it out altogether. There are some insurers who don’t charge any type of sales charge. These annuities are akin to no-load mutual funds.
HOW ANNUITIES WILL HELP
Annuities are great for investing your after-tax dollars on a tax- deferred basis. Think about it. If you could put away money and then not be taxed on the growth, might your overall nest egg grow faster? Annuities help people shelter their money from the government for a
This is the IDS Life surrender charge schedule. Other companies may use a different one.