Bonus Annuity
A bonus annuity is a type of variable annuity in which the insurance company adds an average of 3% to 5% to each of the premium payments. The tradeoff is that the surrender period-the period in which the owner cannot withdraw money from the annuity without paying a penalty-is usually longer than in other annuities. Bonus annuities may charge higher fees than other annuities. Owners pay no taxes on the income they receive until it is withdrawn.
