Speaking of liquidity … it is expensive . And nowhere has it become more apparent than in the penalty-free withdrawal amount that is offered on fixed and indexed annuities . Historically speaking , 10 % penalty-free withdrawals have been an annuity mainstay . No more . Five percent penalty-frees are becoming more prevalent now , and some insurance companies are splitting the difference at 7 % or 8 % penalty-frees .
Minimum guaranteed surrender values ( MGSVs ) on indexed annuities ensure that a secondary guarantee is paid on the annuity , in the event of death or cash surrender . Generally speaking , the
MGSV available on indexed annuities today is [ 0.15 % -3.00 %] interest , credited on 87.50 % of the premiums paid . So in addition to the 0.00 % floor , an indexed annuity will pay no less than a return of the premiums paid ( in the event of cash surrender or death ), after a 14-year period . Over the past decade or so , fixed annuities ’ MGSVs have been a floor of 1.00 % -2.00 %. Now , we are seeing fixed annuities with MGSVs that mimic those on an indexed annuity : [ 0.15 % -3.00 %] interest on 87.50 % of the premiums paid .