Surrender Charge Estimator
A surrender charge is a declining percentage a carrier applies when you withdraw more than the contract's free amount during the surrender period. This free estimator subtracts the free-withdrawal allowance first, applies the schedule rate for your contract year, and shows an illustrative charge and net proceeds. It is educational only and does not read your actual contract.
- Free amount this year
- $20,000
- Amount subject to charge
- $180,000
- Illustrative net proceeds
- $187,400
- Years left in schedule
- 7
Illustrative estimate only — not a quote, projection, or guarantee. Actual schedules, free amounts, market value adjustments, rider charges, and tax treatment vary by contract and state. Read your contract and speak with a licensed professional before any withdrawal or exchange.
The illustrative 10-year schedule
Surrender charges decline each contract year until the period ends. The row highlighted below is the contract year you entered.
| Contract year | Illustrative charge rate |
|---|---|
| Year 1 | 10% |
| Year 2 | 9% |
| Year 3 | 8% |
| Year 4 | 7% |
| Year 5 | 6% |
| Year 6 | 5% |
| Year 7 | 4% |
| Year 8 | 3% |
| Year 9 | 2% |
| Year 10 | 1% |
| Year 11 onward | 0% |
Related reading: how surrender charges work, market value adjustment, and free withdrawal.
Frequently asked questions
- How is an annuity surrender charge calculated?
- The charge is normally a declining percentage applied to the amount withdrawn above the contract's free-withdrawal allowance. A ten-year schedule that starts at ten percent typically drops about one point per contract year until it reaches zero. Some contracts apply the percentage to the premium paid rather than the current account value, which can produce a different figure.
- What is the free-withdrawal amount?
- Most deferred annuities let you take a set percentage of the account value each contract year — commonly ten percent — without a surrender charge. Estimators should subtract that allowance first, because the charge applies only to the excess above it.
- Do surrender charges ever go away?
- Yes. The surrender charge declines to zero at the end of the surrender period, after which the account value is fully accessible under the contract terms. Knowing the exact year your schedule ends is one of the most useful facts about a contract you own.
- Is a market value adjustment the same as a surrender charge?
- No. A market value adjustment is a separate provision in some contracts that adjusts the amount payable up or down based on how interest rates have moved since issue. It applies in addition to any surrender charge and is not included in this estimate.
- Should I surrender an annuity to avoid future charges?
- That is not a decision this tool can make. Surrendering can forfeit riders, bonuses, and tax deferral, and may create a taxable event. This estimator is educational only. A licensed professional should review the actual contract before any withdrawal, exchange, or surrender decision.
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