Easy for people to say they know something but then not articulate anything. Glib answers are more sales pitchy than anything. Why not respond with some real meat. And tell me what is so inaccurate about what I posted.
I'm so sorry I didn't learn of this post until years later. The comments you have been receiving are malicious and misleading. There is a turf war out there for your retirement dollar. Mutual fund companies versus insurance companies. Mutual fund companies would have you believe that the evil insurance companies are the villains. But I would ask you to google or youtube a 60 Minutes segment called "401k Fallout." What you'll discover in this segment is that the mutal fund companies are every bit the crooks they would have you believe the insurance companies are. They gripe about surrender charges, yet they won't disclose the fees that they charge. Often times they deliberately mislead you, the consumer. I don't want to ruin the segment for you, but please do check it out. You will see that these companies will charge you an annual undisclosed, non-surrender fee.
So let's talk about the surrender charges. Insurance companies, as long as we are not talking about variable annuities, will make the following deal with you. They promise not to lose your money and will guarantee your contributions and interest gained from loss. What does that mean to you? You put money in and you get every penny back. They share in the growth. LSW offers equity indexed annuities which means that they link the growth of your account to a market, typically the S&P 500. I am a former teacher with LAUSD and when I sit down with people I show them my own LSW account that I contributed to while I was teaching. What they see is that in 2007 I earned around 6.5% on my account. In 2008 and 2009 when everybody was losing, my account stayed safe. I didn't earn much, but I didn't lose anything either. THE ONLY WAY A COMPANY CAN GUARANTEE YOU THAT YOUR MONEY WILL BE SAFE, AND NOT CHARGE YOU ANNUAL FEES, IS IF YOU ALLOW THEM TO HOLD ONTO IT FOR A PERIOD OF TIME... WHICH YOU CHOOSE. In most cases, the surrender fee is a non-issue because your goal is to maintain and grow the account over time so that it will provide you with a lifetime of income. The surrender charge gradually goes to zero over a period of 7 to 15 years, and if your agent is doing the right thing by you, he/she will match the period to your needs.
Let's do the math. You put your money in an LSW annuity with a 14% surrender charge that goes down 1% every year. You have $20,000 dollars in it. You hold onto it for even 5 years. That surrender charge has gone down to 9%. In the mean time, let's say conservatively you have made an additional $5000 over that 5 year period. That brings your account to $25,000. That means if you were silly enough to move all of your money, you would lose less than $2,500 for doing that. Meanwhile you haven't lost any of your money to volatility in 5 years and and the company hasn't taken any "non-surrender fee." But if you are smart, you will leave it there for as long as you possibly can and won't get sucked into the pie in the sky sales practices or the misleading banter. By the way, the alternative is to allow a company to charge you around 2% (or more) per year to manage your money. If you do the math, that's about $400+ per year, totalling around $2,000 to $2,500 over 5 years anyway... and you didn't even have to surrender it to have the privilege of paying that out. And those annual fees stay with you whether you have the account for 1 year or 40.
One last thing. Don't be mislead with the notion that you would earn a lot more with a different account. I've seen plenty. I don't believe I have seen one that has performed much better than 6 to 10% in any one year. And when they lose, guess what, it all goes back. If you're going to play the risk game, you have to be making serious advances to be able to weather the inevitable down turns. Ask around. Ask people who are not biased if they have noticed a substantial enough gain in the up times to off-set the losses in the down times. Most haven't.
Amazing, someone trying to justify a 14% surrender charge. Then comparing an Equity Indexed Annuity to an investment in the stock market as opposed to a straight fixed annuity or something comparable. Unbelievable.
A straight fixed annuity has surrender charges equal to or more than an EIA. Obviously you don't have a clue.