15th Dec 2009
Questions To Ask Yourself When Shopping For The Best Annuity Insurance
When you shop for annuities, you need to keep your needs in mind from the start. There are many different products on the market but to find the right annuity, you need to find the best annuity for your needs. These tax-deferred products come in all styles, just like cars. Just as with a car, a family of six wouldn’t want a two-seated convertible for the family car, no matter how attractive it is. The same goes for an annuity. Some returns might be alluring but if the basics of the product don’t fit your needs, it’s not the best annuity for you.
Shopping for annuities is much like other shopping. You first need to make a list of the things you find important and then prioritize it. You’re the only one that sees the list so it doesn’t have to be fancy. Knowing what you want helps you to find the best annuity for your situation regardless of whether you defer payment or take an immediate annuity.
When do you need the funds? If you need the money for a large purchase within a year or two, an annuity may not be the best product for your situation. Most annuities are long-term investment, although some offer a surrender period of a year or less. Just like a short-term CD, you get a slightly lower interest rate. If, however, it fits your needs, then it’s the right annuity for you.
Do you want an income or simply a tax-deferred parking garage for you money?
If you simply need a place to defer the interest income and keep from paying taxes on your Social Security, you’ll want to look at the initial rates, rate guarantee period and overall minimum rate guarantee. Those that want an immediate annuity need to check the amount of payment for the selected time.
Do you want it jointly held? Not all annuities allow for a joint annuitant and owner. If you want to make certain that there’s an income that neither you nor your spouse can outlive, this option is necessary.
If you take an immediate annuity, check the wording in the contract. People that use immediate annuities for Medicare planning need different wording than those that simply want a lifetime of payments. In order to qualify for Medicare planning the annuitant or joint annuitant can’t access any of the funds, so any rights for emergency funds negates the contract for this purpose. The person that wants an income for the rest of their life might find this ability appealing, however.
See how long the surrender period lasts. Even though you may never want the funds yourself, new products always come on the market and they might fit your needs better or have other benefits, such as a higher interest rate. If you have a fifteen-year surrender period with a high percentage of surrender charge, you won’t be able to take advantage of the better product without losing funds to surrender costs.
Find out what the minimum investment is and whether you can add more funds later. Some people don’t like to jump into a product with both feet but test the water first. By depositing the minimum, they get a chance to investigate the annuity. Once they’ve put in funds and found how carefree the product is, they often want to add more. Occasionally, people use it as a place to deposit the funds they had to remove from an IRA or pension. Since the amount is removed annually, annuities that allow subsequent investments are perfect.
Know what you need and what each contract offers before you make your final decision. By narrowing the field to your requirements, you’ll make the decision of an annuity purchase much easier.
Christopher Paul writes content for best fixed annuity – a growing site committed to providing people with unbiased information and advice for their retirement. We provide up to date information on market conditions, the benefits, and the myths agents will tell you when looking for annuity insurance.
Leave a Reply