Annuity Advice

What You Must Know About Annuities  

Types: There are different types of annuities.  Some are designed for accumulation and growth; while others are designed to maximize retirement income. Fixed annuities provide a safe alternative to bank CD’s. It’s very important to select the right type of annuity for your situation. 

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Traditional: If you purchase a traditional fixed annuity, find a company that has a history of providing competitive renewal rates. This is important because the interest rate you earn is only guaranteed for a portion of the term. Some companies have a history of paying better renewal rates than others. The rates for CD-type annuities remain the same for the term. 

Immediate: If you purchase an immediate annuity with a “life with cash refund or life with installment refund”, the listed beneficiaries will receive 100% of the remaining dollars.  Annuities avoid probate, so select the right beneficiary!

Rates: Rates that look too good to be true, usually are. Make sure to check the companies rating before purchasing and look for stable, highly rated companies. You also want to diversify. Don’t invest all of your savings with 1 company. 

Income:  Income annuities (SPIA’s) usually provide the highest contractually guaranteed payout of any type of annuity if you need “income now”. SPIA’s also have no fees.  

Conflicts of Interests: Insurance agents usually get paid more the longer the money is locked up.  Many states have banned annuities with terms over 10 years.  You should do the same. 

Uncapped: You might have seen annuity ads where an annuity earned 12-15% with no risk. These come from “uncapped” index annuities. These returns are possible when market indexes go up considerably. Keep in mind these returns are not normal. 

Variable: Be careful of the fees on variable annuities.  Variable annuities have many different layers of fees. Get an itemized breakdown of all of the fees.  If your variable annuity earns 7-9% gross and you pay 3-4% in fees, you may be better off in fixed products.

Compare Annuities: Shop around. Don’t buy any annuity until you compare the rates, benefits and fees of all of the products available.   Rates vary considerably! The top 5 year fixed annuity is now paying 220% more interest than the bottom in our database. 

Index Annuities: Does it have a cap?  In plain English, how is the gain calculated?  If you are looking at index annuities with an income rider, we can compare many products and show you which products guarantee the most income in our free report. 

Let us help you. We compare among over 1,400 annuities from America’s largest annuity database to find the highest guaranteed returns.