Getting an Annuity Quote? Some Things to Consider
The word annuity in and of itself is an enigma. What is an annuity? In its purest form, an annuity is a contract between an individual and an insurance company spelling out contractual obligations, benefits, and restrictions. Does an annuity make sense for you, and should you consider owning an annuity? There are numerous reasons for owning an annuity, but the most common reason is using an annuity for income. Annuities possess an excellent feature; an annuity can guarantee income for as long as a person wants, even for an entire lifetime. Here are some key annuity features that are helpful to know. Annuities come in two flavors: those sold as securities and those sold as insurance.
- Annuities contain guarantees.
- Guarantees can be anything from an interest rate to a named beneficiary.
- Annuities sold as securities contain fees, expenses, and charges; annuities sold as insurance do not.
- Annuities sold as securities can offer both the highest rate of return as well as exposure to risk or loss.
- Annuities sold as insurance will not return the highest interest rate, but the funds in the account are protected from loss.
- The independent rating service assigns the financial stability score for the insurance company.
- The amount of interest you will earn on your annuity.
- The reason for the annuity and what is the actual benefit desired.
- What is the contractual period of the variable annuity (in years)?
- What are the annual fees?
- Does the contract charge to manage your money, and if so, what are the fees?
- Does the variable annuity contain additional riders, and if so, what are the fees?
- Does the variable annuity allow for investment in a fixed interest rate, and if so, what are the interest rates?
- Can the variable annuity be used as a pension income, and are there charges for setting the pension up?
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