# Does an annuity have a cash value?

Category:
personal finance
retirement planning

The premiums that you put into the

**annuity**represent its initial**cash value**. Over time, depending on the terms of the**annuity**, the**cash value**will vary based on the performance of the**annuity's**investments. Fixed**annuities**typically see less volatility in their**cash value**.

People also ask, can you lose your money in an annuity?

This means that it is possible to **lose money**, including **your** principal with **a** variable **annuity** if **the** investments in **your** account don't perform well. Variable **annuities** also tend to have higher fees increasing **the** chances **of losing money**. Penalties for early withdrawal.

**death**of an

**annuity**owner,

**annuities**can be left to a beneficiary selected by the owner. After an annuitant

**dies**, insurance companies distribute any remaining payments to beneficiaries in a lump sum or stream of payments.

Just so, how do you calculate the cash value of an annuity?

For example, if the **annuity** pays $1,000 each year, multiply $1,000 by 5.63 to get $5,630, the **annuity's** future **value**. Divide this future **value** by the annual multiplier on your lump sum, which you **calculated** in Step 2. Continuing the example, divide $5,630 by 1.338 to get $4,208. This is the **annuity's cash value**.

**There are also potential tax penalties.**

- Review your annuity contract, and look at the clause covering surrender fees. Usually they start high, then decline over a period of years.
- Take your money piecemeal.
- Wait until you're 59 1/2 to withdraw from your annuity.
- Purchase a "no-surrender" annuity.