Five questions you should ask before buying an annuity
While annuities can be a great choice, they are not for everyone. The Insurance Information Institute says there are 5 questions you should ask before you buy.
Annuity Basics
Annuities are long term investments sold by insurance companies. They can allow you to save money on a tax deferred basis or provide you with retirement income immediately, and they protect you against outliving your assets. There are several different types - some provide a guaranteed fixed income and others invest in the stock market and provide a variable income.
5 Questions to Consider
- Am I comfortable with the risks involved in this annuity? Some are guaranteed and some are not.
- Do I have emergency funds? If you don't have additional cash you can count on for an emergency, an annuity is not for you.
- What will I be charged if I want to withdraw my investment early? That depends on the annuity. Shop around, because they all have different fees and different early withdrawal charges.
- What happens to the money if I die? There are several different options out there. Some continue to pay to beneficiaries and some do not. You'll want to know before you buy.
- And, am I sure that this annuity is good for someone of my age, health and financial situation?
Annuities are regulated by the SEC and state insurance commissioners. Insurers are required to take various customer characteristics into account before suggesting a product. State laws also have what's called a free look period, usually from 10 to 30 days during which an annuity can be returned no strings attached.
About the Insurance Information Institute:
The I.I.I. is an educational, fact finding and communications organization funded by the property casualty insurance industry to explain what insurance is and how it works. Each year, the I.I.I. works on more than 3,700 news stories, handles more than 6,000 requests for information and answers nearly 50,000 questions from consumers. www.iii.org
A podcast with the 5 questions you should ask before you buy is available (in English and Spanish) to download from iTunes. Search Insurance Information Institute and right click on the red III logo.
To reach the Insurance Information Institute's Communications Department call: 212-346-5550
More information about annuities: