Annuities have fees and charges that vary among companies and contracts. In general, though, the fees and charges associated with fixed annuities are lower than those found in more-complex variable annuity contracts.
Fixed annuity fees and charges typically include the following:
- Mortality & Expense Charges: These pay for the insurance guarantee, commissions, and other sales and administrative expenses.
- Premium Taxes: These are deducted from premium contributions.
- Surrender Charges: Issuers will generally impose a surrender charge if the annuity is cashed in before a specific period. In most fixed annuities, if less than 10 percent of the accumulated value is withdrawn this charge does not apply (though IRS penalties may be incurred).
