Bonus annuities may make sense if you want to upgrade from an older annuity where surrender charges still apply. They might work, for example, if you are locked into a fixed annuity and want the opportunity for greater returns that a variable annuity (with stock market exposure) may provide.
On the other hand, if you are satisfied with your annuity and have passed the period for surrender charges, switching to a bonus annuity might not be suitable. Aside from offsetting the cost of switching annuities, do bonus annuities make sense? For a five- or a 10-year holding period, a bonus annuity might be worthwhile.
However, if you are in for the long-term, 15 or 20 years or longer, you probably will wind up paying more, through additional annual charges, than the upfront bonus is worth.
