The Jacobs Company; Fees

The Jacobs Company
Fees

Fees

No matter which type of annuity you choose, projected and guaranteed charges are an important consideration. The first fee to consider is the surrender charge. Most annuities do not have front end fees, but nearly all have some back end fee. A very common annuity surrender charge would be a 7 year, 7% decreasing surrender penalty (7%,6%,5%,4%,3%,2%,1%,0%). In a contract such as this, you would pay a 7% penalty for surrendering the policy in year one, a 6% penalty in year two, 5% in year three and so on. The bottom line here is this: the longer and higher the surrender penalty, the worse the value to the consumer.

"Administrative Charges" can also be an important consideration, especially for annuities of a smaller amount. These fees vary from $0 to $50, with most fees falling between $12 and $30 per year. Remember that with a $5,000 annuity, a $25 annual fee represents 1/2% point off the yield.

Fixed vs. Variable
Guarantees vs. Promises
Interest Rates
Carrier's Financial Strength

This document was last modified on July 15, 1999