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Can I Buy Annuities With No Fees or Surrender Charges?

Stan The Annuity Man

Question: Can I buy annuities with no fees or surrender charges? Are there no load annuities like no load mutual funds?  Ron in Roanoke, Virginia.

Answer: Phenomenal question Ron!  The annuity industry is very late to the party when it comes to “no load” type offerings that are common in the mutual fund industry.  No load can mean a few things.  It can refer to no fees for buying a strategy, no fees to keep the strategy, and no fees to sell the strategy.  Let’s cover all 3 as they apply to annuities, and the one annuity that covers all of these issues.

No fees to buy an annuity

Here’s where agents blur the lines when it comes to fees and commissions.  All annuities build in the agent’s commissions into the annuity so that you will see 100% of your money go to work.  Regardless of the type of annuity (immediate, indexed, variable, fixed, etc.), for example….if you put in $100,000, you will see $100,000 go to work.  Just be aware that this doesn’t mean that the agent didn’t get paid.  They did!

No fees to keep an annuity

Some agents might tell you that fixed rate annuities, or indexed annuities have no annual fees, and technically they are correct if these annuities are bought with “no extras.” However, most deferred annuities are sold with attached benefits (also called riders), which always come with an annual fee for the life of the policy.  Single Premium Immediate Annuities and Longevity Annuities (aka: Deferred Income Annuities) have no annual fees, but provide little or no liquidity.

No fees to sell an annuity

Here’s where the rubber meets the road, and where the annuity confusion starts in some cases.  The majority of annuities sold today are deferred annuities.  With deferred annuities, there are surrender charges to get your money out of the product.  For example, if the surrender charge on an annuity was 7% and your accumulation (i.e. walk away) value was $100,000…… would receive $93,000 if you fully surrendered the policy.  In my opinion, surrender charges are “fees” and should be considered when making an annuity buying decision.  If you sell a deferred annuity that is past its surrender charge, then there are no fees to sell.  But if you sell your 10 year deferred annuity in year 5, then you will be charged a fee to sell.  Always remember, surrender charges are fees.  As a caveat to this issue, Single Premium Immediate Annuities and Longevity Annuities are not “sellable” strategies and in turn have no surrender charges……but also no liquidity.  If you are considering these 2 types of annuities, make sure that your money is allocated properly and you do not need to access the funds lump sum.

The ONE Annuity No Load Exception

Currently, there are NO LOAD variable annuities available that the consumer can buy direct from the carrier……and can provide pure tax deferred growth, with no surrender charges to get out.  In essence, they provide full liquidity.  Carriers like Ameritas, PacLife, and Jefferson National ( offer variable annuities that have no cost to purchase, no cost to sell, and a very small monthly fees ($20 per month with Jefferson National).  Vanguard, Schwab, and Fidelity also offer no load variable annuities as well.  Annuity purists will point out that the internal mutual funds (aka: separate accounts) of no load variable annuities carry some costs, but these no load offerings offer full liquidity day one….which is what really sets them apart.

I hope this explanation helps, and I predict that more no load annuities will come to the marketplace in the coming years as people yearn for annuity strategies that they can implement without using an agent.

*If you have a question for Stan The Annuity Man, please send your question to  He will answer all questions directly, and might include yours in his next Annuity123 “Ask Stan The Annuity Man” blog every Thursday.

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About the Author:

Stan The Annuity Man is a nationally recognized annuity expert and annuity critic, and has been called the national consumer advocate for annuities… and a walking middle finger of annuity truth.  He is a weekly RetireMentor columnist for The Wall Street Journal’s, and is the exclusive annuity contributor for  His highly acclaimed book, The Annuity Stanifesto, is a top seller in its category, and is known as the go to resource for all things annuity.

Stan The Annuity Man has clients nationwide, and is considered one of the top independent annuity agents in the country.  You can learn more at


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  • Mothra says:

    Thank you for talking up No Load Variable Annuities. I got a $30,000 bonus check in February 2007 and plunked it down with Vanguard into a lifetime Variable Annuity. At the time, I could have bought a guaranteed return of about $1,000 a year, but I chose my own portfolio and it has ALWAYS done better than the guaranteed product I could have chosen. Even in 2008 and 2009! Last year, it returned just under $1,900 and this year is tracking above $1,900. I would have pissed the money away and now I get a nice surprise at the end of the year. Truly!

  • Jon Hastings says:

    Is there an annuity that could work like a money market account for someone that is older than 59 1/2?

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