Annuities can be purchased through insurance agents, financial planners, banks and life insurance carriers. However, only life insurance companies issue policies.

Agents

Agents are insurance professionals who are licensed by your state insurance department. Some agents work exclusively for one insurance company, while others represent several.

Unlike a 401(k) or an IRA, there are no limits on the amount that you can invest in an annuity.

Whether you’re considering a deferred or immediate annuity, the amount of money you should consider putting into an annuity depends on:

Annuities can serve many useful purposes.

Five independent agencies—A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s and Standard & Poor’s—rate the financial strength of insurance companies. Each has its own rating scale, its own rating standards, its own population of rated companies, and its own distribution of companies across its scale. Each agency uses numbers or plusses and minuses to indicate minor variations in rating from another rating class.

Credit scores are based on an analysis of an individual’s credit history. These scores are used for many purposes such as securing a loan, finding a place to live, getting a telephone and buying insurance. Insurers often generate a numerical ranking based on a person’s credit history, known as an “insurance score,” when underwriting and setting the rates for insurance policies. Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims.

Both annuities and life insurance should be considered in your long-term financial plan. While both include death benefits, you buy life insurance in the event you die too soon and an annuity in case you live too long. In other words, life insurance provides economic protection to your loved ones if you die before your financial obligations to them are met, while annuities guard against outliving your assets.

There are two main types of annuities—deferred and immediate—and two main types of life insurance—term and whole life. The chart below compares them.

Why is disability insurance important?

Few people ever anticipate experiencing an illness or accident that might cause them to miss months or years of work, but it can happen. Disability insurance can help you stay on top of your finances. When you don’t have to worry about how to replace your income, you can focus on decisions regarding your health. Because of the financial stability, disability insurance benefits can provide to your household, getting it even when you are young or in good health can be a savvy financial planning move. 

Even over 55, only a small percentage of the population will need long-term care before they are in their 70s or 80s.