What Is The Purpose Of Surrender Charges In A Deferred Annuity? 
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 . Each annuity is structured so that the assets of the company can meet the promises that have been made in the contract . To do that they invest in things that have varying maturity dates . That plan of investment is reflected in the surrender fee . 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 . The same thing happens when you buy a Certificate of Deposit . 