In general every individual would like to insure any asset to safeguard themselves from higher expenses, whereas they consider insuring themselves as more important than all other aspects. The reason is medical expenses seems to be higher if the problem is very serious and complicated, and the one who have no insurance cover might suffer a lot to meet the unexpected expenses in sudden. There are various type of insurances for you to safeguard your health and it is your opinion of choosing one. Some put some of their capital in annuity to spend rest of their life, and this give them good earning when they get retired.
The need for this is many individuals would love to be independent all over their i.e. they resist to seek help even from their children. They also insure their children life to not make them have the burden of medical expense. Many who put their money annuity are not aware of various charges including in it i.e. surrender charges. The surrender charges which go here is nothing but the one who own the annuity has to pay some money if they wish to withdraw the money before the contractual term ends.
Annuity is in simple words you have to insure some amount of money for period of terms, and the company in which they hold their annuity will return their money with interest. Usually for the first 10% of withdrawal of money there is no need to pay the surrender charge. Many would never know that the annuity is not a liquid investment, and such that there is a commission for those who sells you the annuity. The reason for surrender charge is to compensate the insurance company for the expenses they incur on your behalf.
Know About the Risk Of Interest Rate
The risk that you need know is there is higher possibility for any person to change their mind i.e. if you bought an annuity for some period of term with some percentage. If you find any other annuity which has interest percentage you may have second thought of investing in it to have higher returns. The insurance company earns profit by investing your money in some market, but if you withdraw in middle they will be in situation to face huge loss. Only for this reason if you withdraw money for any reason, the surrender charge is incurred to compensate the loss created by you.
So before investing in any type of annuity, read all the terms and conditions carefully, and read about the additional charges they incur within the contractual term. So, you can be safeguarded from any additional penalties and charges.