What is the maximum surrender charge allowed for an annuity contract issued to a consumer over age 65?

In the context of annuity contracts issued to consumers over the age of 65, the maximum surrender charge allowed is established by regulatory guidelines to protect older consumers from excessive fees when they decide to withdraw funds from their annuity. A surrender charge is a fee imposed by the insurer when the contract owner withdraws funds before a certain period, typically during the early years of the contract.

The allowable maximum of 10% is designed to strike a balance between providing the insurer with the necessary time to recoup costs associated with marketing and issuing the policy while also safeguarding the consumer's access to their funds. This regulation acknowledges that individuals over 65 may have different financial needs and may require more flexibility in accessing their funds without incurring substantial penalties.

Thus, the limit of 10% reflects a consumer protection measure aimed at ensuring that seniors can manage their investments and retirement savings without being disproportionately affected by high surrender charges.