Surrender charges are penalties assessed when you withdraw more than the free-withdrawal allowance (typically 10% of contract value per year) before the surrender period ends. Indexed annuity surrender periods commonly run 5 to 10 years — longer than most fixed annuities — with the charge percentage declining each year. For example: 10%, 9%, 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%, then zero. These charges exist because they allow the carrier to invest your premium in longer-duration assets that support the principal protection guarantee.