CD-Type Annuities - Surrender Penalties

Surrender penalties are easy to understand. Like many time investments, an early liquidation of your CD-type annuity may incur a penalty. The surrender schedule is usually printed plainly in the sales literature and in your annuity policy. Often, the surrender penalty declines with each passing year. For example, an annuity may have a 5% penalty the first year, a 4% penalty the second year, and so on.