CD-Type Annuities - Free Withdrawals

Some CD-type fixed annuities allow a portion of the principal to be withdrawn each year without penalties. This amount is often referred to as the free withdrawal amount. This feature allows investors a way of accessing cash in case a need or emergency arises. When provided on an annuity, the free withdrawal amount is often 10% per year. For example, if your annuity is worth $10,000 at the beginning of its term, you would be able to distribute $1,000 during the year without a penalty. If this feature is important to you, make sure your annuity offers it.