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Surrender Period

Last updated: September 17, 2016

What Does Surrender Period Mean?

A surrender period is the amount of time that must elapse before the investor can withdraw money out of an annuity or similar insurance product without incurring a monetary penalty. This penalty is known as the surrender charge or fee, which may decrease as time goes on.

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Insuranceopedia Explains Surrender Period

Surrender periods vary from one annuity to the next. They help guarantee that the investor will keep their money with the insurer for at least a certain time period. Often, longer surrender periods may entail better terms. For example, the insurer may guarantee a higher interest rate or offer longer guarantees. Nevertheless, they may not benefit nor suit the investor at all. Investors can often find a reasonable surrender period with terms they can be happy with, so it does not pay to automatically opt for longer surrender periods for the promise of better terms.

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