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	<title>New answer on: What Is The Purpose Of Surrender Charges In A Deferred Annuity?</title>

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		<title>By: David Pipes</title>

		<link>https://insurancelibrary.com/annuities/what-is-the-purpose-of-surrender-charges-in-a-deferred-annuity</link>

		<dc:creator>David Pipes</dc:creator>

		<pubDate>Fri, 29 Aug 2014 19:10:27 +0000</pubDate>

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		<description><![CDATA[The insurance company sells an annuity as a long term cash accumulation instrument with the ultimate intention being to produce a lifetime income to the annuitant.&#160; Each annuity is structured so that the assets of the company can meet the promises that have been made in the contract.&#160; To do that they invest in things that have varying maturity dates.&#160; That plan of investment is reflected in the surrender fee.&#160; To take a bond for example that will mature in five years and cash it in early the company will realize a loss of earnings.&#160; The same thing happens when you buy a Certificate of Deposit. ]]></description>

		

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		<title>By: Jim Winkler</title>

		<link>https://insurancelibrary.com/annuities/what-is-the-purpose-of-surrender-charges-in-a-deferred-annuity</link>

		<dc:creator>Jim Winkler</dc:creator>

		<pubDate>Fri, 29 Aug 2014 15:25:55 +0000</pubDate>

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		<description><![CDATA[That is a great question! Whenever you deposit money into an account, be it at your bank, credit union, or annuity fund, that money doesn&#039;t just sit there in a box labelled &quot;you&quot;. The financial institution immediately takes the money from the &quot;you&quot; box, and uses it to cover their expenses, pay out someone else, or invest it to make their profits. When you take that money out early, it costs them, as they were planning on it being there until the annuitization phase of your annuity was scheduled to begin. Now they have to scramble to get the money back into the &quot;you&quot; box. That often costs them money from the interest they were earning by using the money you&#039;d put in your &quot;box&quot;. To recapture some of their loss, and to act as an incentive to deter you from pulling out your &quot;box&quot; early, they assess the surrender charges. You will notice that they are highest at the beginning of your annuity, and decrease as time goes on. That is because the longer your money stays with them, the more likely it is that they&#039;ve earned what they needed to to repay your money with it&#039;s promised interest. Does that help? I hope so, feel free to contact me if it doesn&#039;t, okay? Thanks for asking!]]></description>

		

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