How to read your annuity statement.
Most annuity owners can't say what their contract actually costs them each year. The number is on the statement — it's just not labelled the way you'd expect.
Three values, and only one is yours today
Nearly every annuity statement shows several different figures, and they are not variations on one number. Find each of these:
Contract / account value
What the contract is worth on paper before any exit costs.
Surrender / cash value
What you'd actually receive if you cashed out today. The real number.
Benefit base / income base
A calculation figure for rider income only. Not withdrawable, not inheritable.
If the benefit base is the largest of the three and it's the one you've been quoting to yourself, that's worth correcting today. More on how benefit bases work.
Where the costs hide
Annuity statements rarely present a single "total fees" line. The charges are usually itemised separately, sometimes on a later page, sometimes only as a transaction entry. Look for:
- Rider charges — income riders, death benefit riders, enhanced withdrawal riders. Often the largest single cost, and often charged against the benefit base rather than your actual value
- Mortality & expense (M&E) — on variable contracts, a percentage of assets
- Administrative charges — sometimes a flat annual amount
- Subaccount / fund expenses — on variable contracts, charged inside the funds and easy to miss entirely
Add them together. That total, as a percentage of your surrender value, is what the contract costs you a year. Many owners are surprised by it, and a fair number have been paying for a rider they've never intended to use.
The annual five-minute check
Find the surrender charge schedule
How many years remain, and what percentage applies today. This determines whether changing anything is even practical right now.
Confirm which riders are active
And whether you still want them. Riders bought for a plan you've since abandoned are pure cost.
Check the crediting for the year
On an indexed contract, note the cap, spread, or participation rate actually applied. These are frequently reset annually and can move against you.
Verify the beneficiary
The most commonly wrong field on any annuity statement, and the most consequential. Divorces, deaths, and births all invalidate old designations.
Note the issuing carrier's current rating
Especially if the company has been sold since you bought. How to check.
Next questions.
This page is educational and general. It is not a recommendation, and it is not tax or legal advice. Contract terms vary by carrier, product, and state. Annuity guarantees depend on the financial strength and claims-paying ability of the issuing insurer. Read your own contract, or bring it to us and we'll read it with you.
Bring the statement.
We'll go through it line by line and tell you what it actually costs. Free, and nothing to sign.
Book a Free Review →Statement still not making sense?
Send it over. We will decode the account value versus the benefit base, the charges taken this year, and where you actually stand if you surrendered today.
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