Bailout Provision

The Bailout Provision is a clause found within certain fixed-income investment contracts, particularly annuities, which allows investors to withdraw funds without incurring a penalty if the investment's interest rate falls below a specified level.

This provision is designed to protect investors from being locked into an annuity with declining returns if the overall interest rate environment changes unfavorably. When triggered, the bailout provision permits the policyholder to pull out their investment without the surrender charges that typically apply for early withdrawal, offering a form of risk management against interest rate risk.