Are surrender charges a reason to avoid replacing an annuity?

Surrender charges are not automatically a reason to reject a replacement, but they are a real cost that has to be justified by what the new contract improves. Review the existing surrender schedule and the full terms of both contracts, including fees, guarantees, income features, and any restrictions you would be giving up or starting over. A replacement only makes sense after the dollar cost and the long term benefit are compared side by side, rather than relying on an illustrated return.