Will you be stuck with a bad annuity if you change your mind?
The honest answer is: maybe… but it depends on the type of annuity you bought and when you try to get out.
This is one of the biggest fears I hear from retirees. “What if I pick the wrong one?” “What if I regret it?” That’s exactly why understanding how annuities work before you buy is so important.
Let’s walk through what really happens, and how to protect yourself.
Need help choosing the best annuity for your unique situation? Have questions about getting an annuity? If so, it’s best to speak with an annuity specialist. Watch this short video to see how I can help you do this (at no cost to you!)
Tip: See how much an annuity could pay you using our annuity calculator
Are All Annuities Impossible to Get Out Of?
No. But some are much harder than others.
There are certain annuities that are completely irrevocable.
For example:
- Single Premium Immediate Annuities (SPIAs)
- Deferred Income Annuities (DIAs)
With these, you give the insurance company a lump sum. In return, they guarantee lifetime income.
But here’s the key:
👉 There is no cash value. You cannot reverse it.
Once it’s issued, it’s done.
That’s great if your goal is guaranteed lifetime income and you’re confident in the decision. But if interest rates go up later or your situation changes, you can’t pull the money back.
💡 Pro Tip: SPIAs and DIAs are powerful tools, but only when you are 100% certain you want permanent lifetime income.
👉 Want help comparing income annuity options? Schedule a call here.
What About Annuities With Surrender Charges?
This is where most retirees land.
These include:
- Fixed Index Annuities (FIAs)
- MYGAs (Multi-Year Guaranteed Annuities)
- Income rider annuities
These do have cash value, but they also come with a surrender period… usually 7 to 10 years.
If you cancel early, you’ll pay a surrender charge.
Example surrender schedule might look like:
- Year 1: 10%
- Year 2: 10%
- Year 3: 9%
- Year 4: 8%
- Year 5: 7%
- And so on…
So yes, you can get out.
But you may take a hit.
👉 Before choosing an annuity, use the calculators at johnstevenson.com to see real-world payout comparisons.
What Is the “Free Look” Period?
Here’s something many people don’t know.
Almost every annuity includes a free look period — typically 10 to 30 days depending on the state.
During this time:
- You can review the contract
- Change your mind
- Cancel and receive 100% of your money back
No penalties.
This is your safety window.
After that? Surrender charges apply.
💡 Pro Tip: Never rush the review process. Read the contract during your free look period and ask questions immediately.
Real-World Example: Changing Your Mind After 30 Days
I’ve seen this happen.
A client bought:
- A high-income lifetime annuity
- A MYGA paying around 6%
Both were strong products.
But a month later, he changed his mind. He wanted more growth instead of guaranteed income.
Technically, he could surrender.
But:
- He would lose roughly $20,000 in surrender charges.
- Many carriers would not accept surrendered funds into a new MYGA for at least a year.
- Bonus annuities might “make him whole” upfront, but then throttle growth later.
This is the catch-22.
You can get out, but sometimes replacing it creates a new problem.
👉 Want to make sure you’re choosing the right structure from the start? Schedule a call and we’ll walk through it together.
What If You Truly Have a “Bad” Annuity?
Not every annuity is bad.
But some are poorly structured:
- Low caps
- High internal costs
- Weak crediting strategies
- Designed primarily for high commissions
I regularly talk to retirees earning 2–3% annually in products that simply aren’t competitive anymore.
They ask: “Can I get out?”
The answer depends on:
- How many years remain in surrender
- How large the penalty is
- Whether a replacement product truly improves the situation
Sometimes it makes sense to move.
Sometimes it makes more sense to wait it out.
This is why independent comparisons matter.
Special Situations: Can You Exit Without Penalty?
In certain cases, yes.
Many contracts allow penalty-free surrender if:
- You are diagnosed with a terminal illness
- You enter long-term care
- You pass away (beneficiaries receive the value)
Every contract is different.
That’s why reading the fine print matters.
How to Avoid Getting “Stuck” in the First Place
Here’s the truth.
Most regret doesn’t come from a bad product.
It comes from:
- Not understanding how it works
- Buying for the wrong goal
- Not realizing it was permanent
- Chasing a number instead of a strategy
Before buying any annuity, ask:
- Is this for income or growth?
- Do I need flexibility?
- Am I comfortable locking this up for 7–10 years?
- What happens if I change my mind?
Clarity prevents regret.
Conclusion
You won’t necessarily be stuck.
But you could be locked in, depending on what you buy.
- SPIAs and DIAs = irreversible.
- FIAs and MYGAs = flexible, but with surrender penalties.
- Free look period = short window of full protection.
The key isn’t avoiding annuities.
It’s choosing the right one for your specific retirement plan.
Need help with finding the best annuity for your retirement?
Click here to schedule a call with me.
On the call, I can help you:
- Determine what type of annuity is best for you
- Find the highest paying annuities for your unique situation
- Answer any other questions you may have