Your Annuity's Guarantee Period Is Ending. Now What?

The Window You Can Easily Miss

A multi-year guaranteed annuity is built around a set term: three years, five, seven, sometimes ten. What happens when that term ends is one of the most overlooked moments in owning one, and it's also one of the most important.

Many fixed annuities give you a limited period at the end of the guarantee term, often around 30 days, to make a choice without triggering a surrender charge. The exact length and the rules around it depend on the contract. Insurers usually send a notice ahead of time, but those letters are easy to miss in the mail or set aside and forgotten.

Four Options When a Term Ends

If you're holding a maturing contract, here's generally what's in front of you.

• Let it renew. If you do nothing, many contracts continue into a new term at a renewal rate the insurer sets. That rate may be lower than what new buyers are being offered, and a new surrender schedule may apply depending on the product.
• Take the money. You can withdraw it. For a non-qualified annuity, the gains are generally taxed as ordinary income when withdrawn, and withdrawals before age 59 1/2 may face a federal tax penalty.
• Move it to another annuity. A transfer through a tax-free exchange, often called a 1035 exchange for non-qualified money, can move the value to a new contract without triggering tax on the gains, if it's done correctly.
• Turn it into income. Some people use a maturing contract to start guaranteed income, especially if they're further into retirement.

Why the Renewal Rate Matters

The difference between an automatic renewal rate and a competitive current rate can be meaningful over several years. That's the part worth slowing down for. A contract that renews on autopilot isn't necessarily renewing at a rate that reflects what's currently available in the market. It's renewing at whatever rate the insurer sets for existing contracts in that window.

Once the window closes, moving the money may trigger a new surrender charge.

That's the trade-off. The 30-day (or similar) window is your chance to look around without a penalty. Once that window shuts, you're often locked back in, and leaving early at that point can cost you.

A Simple Habit to Protect Yourself

Put every annuity's term end date on your calendar, with a reminder 60 days ahead. That gives you time before the no-penalty window even opens. Use that lead time to see what current rates look like and to decide on purpose, rather than by default.

None of this is about predicting what rates will do. It's about not letting a contract roll forward automatically when a 30-day conversation could have given you a clearer picture of the alternatives: renewing, withdrawing, exchanging, or converting to income. The options are the same regardless of which one makes sense for a given situation. What changes the outcome is whether the decision gets made deliberately before the window closes, or defaults into a renewal because the notice got missed.