Many annuities have fees that may include:
- Surrender charges - If you cancel or cash out your annuity early, you'll need to pay a fee. It's higher in the early years of your annuity and may get lower or go away over time. This fee is usually 5 to 25% of the money you take out. On average, insurers can charge this fee within seven years of opening your annuity.
- Mortality costs - This is a fee insurers charge to provide you with a death benefit.
- Administrative costs - You may have to pay a separate fee for mail and services.
- Investment-cost ratio - Insurers charge a fee to manage your annuity's investments.
- Additional costs of riders - Riders are additions to your annuity that provide more benefits.