How Do You Decide Which Annuity is Right?
Posted on April 1, 2015
Choosing an annuity can be difficult. There is so much to know and learn about and it can all seem like it is over your head. Having a trusted advisor that can help you in determining what is best for you can be priceless. Whomever you choose as your advisor should be knowledgeable, communicative, and truly care about you and helping you to reach your end goal.
There are two basic types of deferred annuities – fixed annuities and variable annuities.
Fixed Annuities guarantee your money will accumulate at a minimum specified rate of interest. A fixed deferred annuity always contains guarantees. For example, it might guarantee the interest rate on the funds accumulating in your policy will be at least 2%. The guarantees are conservative, so that the company will be able to pay you the guaranteed amounts, even if conditions are very bad. If you are shown any tables of numbers illustrating how the annuity might grow in the future, keep in mind that non-guaranteed numbers could turn out to be lower or higher than what you are seeing. Some annuities also may offer a higher guaranteed rate of interest for the first year than for subsequent years.
An equity-index annuity is a fixed annuity that pays interest linked to a stock market index, such as the Standard & Poor’s 500. Unlike variable annuities, equity-index annuities cannot lose value. They typically offer a minimum guaranteed return with additional interest based on how the index performs. However, some of these annuities have a minimum guaranteed interest rate of 0%, so it is important to ask.
NOTE: If you cancel your contract, or take money out, there may be surrender charges deducted from the accumulation value. The amount you receive is usually referred to as the cash value. It is not suggested that you purchase a deferred annuity unless you are planning to keep it for more than 7 years.
You have worked hard throughout your life to build up assets. Be sure to take precautions to protect yourself and those assets. Purchasing insurance and other financial products such as annuities that meet your needs can be challenging. Your financial situation could change so it is important to review and understand your insurance policies and contracts to decide if they are still right for you. If you are contemplating purchasing a new or replacement policy, you should:
- Obtain all proposals in writing.
- Not let yourself be pressured into buying. Take time to review the information before deciding.
- Do not sign anything you do not understand.
- Consider having a trusted family member, friend or adviser participate in discussions.
- Make sure the agent, broker and insurance company are properly licensed to sell the product you are considering purchasing.
- Make sure you receive a full disclosure of all information relating to the benefits and possible negative consequences if you are considering replacing an existing annuity.
- Obtain a full disclosure of all surrender charges and related time frames in connection with an annuity before you purchase.
If you would like to discuss whether fixed or fixed indexed annuities are appropriate for your client’s family, we would be happy to aside some time to speak with you. Click here to sign up.
John Bulbrook, Bulbrook Drislane – IN-FORCE ™ Secondary Market, Finance and Investments, Secondary Market, Annuities, Fixed Term Annuities, Life Insurance, Structured Settlements, Previously Owned Annuities, Pre Owned Annuities, Immediate Annuities, Factored Structured, Settlement Secondary Market Annuity, Aftermarket annuity, Inforce fixed term annuities, Inforce fixed term annuity, Inforce annuity, Deferred Variable Annuity, Inherited Annuity, Equity Annuities, Straight Life Annuity, Non Qualified Annuity, Mutual Fund Settlement, 20 Year Annuity, 10 Year Annuity, 5 Year Annuity – Click here for his Facebook,Twitter, LinkedIn, Google Plus