I would like to add more flexibility to my withdrawal options rather than be forced to take some payout. TX A. Your experience, which is duplicated among literal millions of school teachers and non-profit employees who participate in 403b plans, is one of the reasons you don't find much enthusiasm for insurance products in this column. Unless you are well advised, you can find yourself in a really miserable contract. That's what you have. You don't appear to have that.
Many contracts have an end to the penalty period.
It may be five or seven years, but it does end. But you don't appear to have that, either. To give you an idea of how badly you are being treated by your vendor, the current average yield on new tax deferred annuity products is 6.35 percent. Either choice would give you access to a mutual fund family so you could diversify the assets in the policy with investments in stock and bond funds with far higher expected returns than your 4 percent guarantee rate. The insurance cost of the T. Rowe Price no-load product is only 0.55 percent a year, less than half the industry average cost, and offers five fund choices.