Annuity Purchase Advice
With advances in modern medicine, life expectancies have been increasing. An annuity purchase is then a very big decision considering that your life may significantly be affected by it. A large part of your retirement income may also very likely depend on it. Due care, therefore, must be given in all matters relating to your purchase. Consider how you want to spend your life in retirement. This will dictate the options you will need to look for when you start shopping for annuities.
There are lots of annuity products available with all different kinds of benefits and features. Despite the limitless options, deciding on which plan to select may not be as difficult as you may think. The key is in knowing what you need and where to look.
You may start by consulting an experienced financial planner. Tell him your expectations and ask for the appropriate options and reliable insurance providers. On your own, you can browse the internet to learn more about the different products. Study the products very carefully and compare. Consider also the stability of the companies offering these products. Those with no track record to speak of may offer the best contracts, but there is no guarantee that these companies will still be around after you have paid the premiums and when the payouts become due. It is always better to buy only from established plan providers that have proven track records.
When comparing annuities, focus on the provisions that cater to your specific needs. Look beyond the fancy features. These could add to the cost of the plan. Remember that each benefit offered can have a corresponding cost. You may ask the provider not to include those you do not need. Also, some of these benefits may cost less if purchased separately from the annuity contract.
Riders are attached to plans and offer additional benefits like bonus credits and death benefits. Death benefit provisions come in handy especially in cases where the annuitant dies within the contract period. With this feature, your family or any designated beneficiary will be entitled to some or all the benefits which the buyer would have otherwise received. Bonus credits, on the other hand, provide for additional amounts, usually in small percentages, added to payouts. There are lots of other riders available that offer various benefits.
Decide on how frequent and how much in terms of payouts you would like to receive. You have the option to receive monthly, quarterly or yearly payouts for life. You can also opt for a one time lump sum payout.
You deserve to enjoy your retirement life because you have worked hard for it. Secure it with a sound investment plan. With a good contract in place, your family’s future is safe and you will never have to worry about out spending your hard earned assets.
Annuities are best suited for long term investors. Any withdrawal prior to age 59 ½ is subject to a 10% tax penalty as well as regular income tax. Annuities often also have a surrender schedule, meaning that withdrawals may be subject to a penalty by the insurance company if not left in for a predetermined amount of time. Any guarantees on principal invested is based upon the claims paying ability of the underlying insurance company.