How to Get Out of My AXA Annuity

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AXA Equitable Life Insurance Company offers several types of annuities through a national network of agents and financial advisors. The company has an AA rating through Standard and Poor's but was given a negative outlook by the credit rating company in February 2009. This may leave annuity holders a bit uncertain about the future of the company and the ability of AXA to pay benefits when the time comes. If you decide you no longer want your AXA annuity, you have several options.

Step 1

Look at your AXA annuity policy and determine the inception date of the contract, as well as the day you received the contract from either AXA or your agent. These two dates will help you establish one of three surrender options: cancellation of the contract during the free-look period; surrender of the policy with charges; or surrender of the policy without any penalties.

In surrendering a contract you give it back to the insurance company and receive the value of the contract back minus any charges. The insurance company is no longer responsible for paying benefits on the contract.

The "free-look period" is a 14-day window after you receive your contract when you can look it over without any risk. If you decide you don't want the annuity in this period, return it to the agent or company at no financial risk to you.

Every annuity has a contract term called a surrender period. This is the minimum amount of time you have agreed to keep your money at the institution. If you pull the money out prior to this period, you will be assessed a fee called a surrender charge. Annuities range from 3 to 15 years, with surrender charges being as high as 15 percent of the money withdrawn.

Step 2

Choose how to invest the money moving forward. While you haven't surrendered the policy yet, whether you choose to leave it in an annuity structure (with a different insurance company) or cash out and do something else with the funds will determine what action you take next.

Your possible actions are: exercise the "free-look period" outlined in Step 3; conduct a 1035 Exchange, transferring the assets to another annuity, as outlined in Step 4; or liquidate the assets, returning them to your personal account, as outlined in Step 5.

Step 3

Exercise the "free-look period" if you are within 14 days of receiving your policy. Insurance contracts require that policy holders be given a period to thoroughly examine a policy upon receipt. Take the entire contract back to the broker and fill out a surrender form designating the free-look period.

Step 4

Conduct a 1035 Exchange. Find and invest in another annuity that you trust. There are many insurance companies that offer annuity products. If your financial adviser is unable to direct you toward one you like, do an online search at sites such as AnnuityFYI.com, which compare various annuities side-by-side for you.

When you find an annuity you want to invest in, fill out a new annuity application as well as 1035 Exchange paperwork, paperwork that allows you to move money from one insurance company to another without having to pay taxes on a distribution. A 1035 Exchange is a tax-free exchange allowed by the U.S. tax code; it does not waive surrender charges levied by the insurance company.

Step 5

Liquidate the annuity. Consult with a tax adviser prior to liquidating an annuity that you have held for several years or has significantly appreciated since you opened it. The growth in value of the annuity will be taxed. This option is generally best if you are no longer interested in tax-deferred savings and want out of annuities entirely.

Request a surrender form and fill it out to do a complete surrender. This will generate a tax consequence; you may also pay a surrender charge if you are still in the surrender period.

Tip

When you surrender a contract you will be asked for the original contract to be sent back with the surrender form. Have this with you when you submit your paperwork to expedite the process.

If you choose to liquidate the account and place the money into your checking or savings account, your can choose any investment option or even spend it on a family vacation. There is no rule saying it has to be re-invested.

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