If you are thinking of purchasing an annuity, read this first.
Purchasing an annuity is a major financial commitment much like buying a house. You might have your annuity longer than your house! As long as you understand the fine print and the annuity is a great fit it can be one of the smartest financial decisions you could possibly make! I am pro annuities for the right situation! Just be sure to understand what you are purchasing.
When you purchase an annuity be sure to:
1. Know the surrender charge schedule. Surrender charges can sometimes last for 15 years and can be very expensive. Purchase an annuity that coincides with your schedule so that money will be free when you need it. Otherwise you may pay major penalty fees when you need money the most.
2. Learn and study your investment time horizon. When will you need money from the annuity and how much will you need? Annuities purchases are long term investing.
3. Check the insurance companies rating before purchasing an annuity. If a higher rated insurance company is offering an annuity that is basically the same then choose the company with the highest rating.
4. Be sure to know why you are purchasing an annuity. Is it for safety, income, growth, security, tax deferral, a guaranteed income stream, or to reduce your social security taxes? Is it for other guarantees? Does it really fit into your financial plan? Are you using the annuity in place of other fixed income investments or as a growth investment? Why the annuity versus other investments? Do you understand why it is the right investment?
5. Understand the differences between a fixed and variable annuity. A fixed annuity cannot go down in value. A variable annuity can go down with the stock market. They can both have certain guarantees so be sure to understand what you are getting. Can it go down in value? Why do you need to purchase an annuity that can lose value?
6. Understand how this annuity is going to affect your taxes when you take money out. Annuities are taxed differently than other investments and be harsher or even better in some cases. Is your annuity held in an IRA? Also, if you are passing this annuity down to heirs then why are you purchasing an annuity instead of life insurance that would likely pass tax free? If you are passing the money to heirs and that is the only purpose then single premium life insurance may be a whole lot better if it is possible obtain.
If you are purchasing a variable annuity:
1. Why are you purchasing a variable annuity that can go down in value? If it is for the past performance you should know that the sub accounts/investment options rarely ever perform the same two years in a row. You need to have a reason to purchase an annuity. Be sure it is right for you.
2. Variable annuities can go down. They can be down when you need to take money out. That would mean you would have less money working to recover from the downturn and taking money out would be a bad idea. If that could be a problem then do not invest in variable annuities.
For purchasing a fixed annuity:
1. Check the surrender charges again. They are usually higher on fixed annuities than any other kind of annuity. Be sure that when you need money it will be available with no charges.
2. Fixed annuities have amazing guarantee options. If you want one of these guarantees be sure to understand it entirely. What happens when you take money out? Look for the penalties not the process of taking money out. You can also compare options with other companies. There are so many now, some other insurance company could have a better option to fit your situation.
One last absolutely vital thing to check is the dollar amount of your states guarantees. Run a Google search for (your state) insurance guarantee. This is how I found my state’s guarantee. Do not go over that amount with a single insurance company ever.
When you purchase an annuity be certain to get all of these questions answered. Most importantly, do not be rushed or pushed into making any decisions. There is no reason to rush through the decision making process with such a long term commitment like purchasing an annuity.
Image from page 60 of “Business shorthand;” (1898)
Image by Internet Archive Book Images
Title: Business shorthand;
Year: 1898 (1890s)
Authors: Kimball, Duran, 1842-1907
Subjects: Lindsley, David Philip, 1834-1897 Shorthand
Publisher: Chicago, D. Kimball
Contributing Library: The Library of Congress
Digitizing Sponsor: The Library of Congress
Click here to view book online to see this illustration in context in a browseable online version of this book.
Text Appearing Before Image:
aljhide (hied Hyde) height (white) item. 3. Time (thyme) type appetite tine tile tire mile mileage mine admire. 4. Benign knife knives libel (liable) like alike live life line alliance. 5. Ripe riot rife derive rise (rice) righteous wipe wife wives wine. 6. Wise wire China bias by-law alibi pipe pine repine pile. 7. Vise (vice) device divide vine divine revive violence defy fine define. 8. Defiance refine file shine side (sighed) sight (site cite) si- lence sign (sine) science lime. 9. Fire bureau rebuke abuse purity purify repudiate argue accuse accumulate. 10. Cure curious duty duly deduce reduce unduly endure tube tumult. 11. Tune fuse refuse refute fuel fury furious sewer mule pol- lute. 12. Annuity huge juice junior judicious attitude decoy coin coil toil. 13. Noise annoyance loyalty royalty join rejoice choice boys boil voyage. 14. Avoid voice soil bounty empower couch doubt down town avows. 15. Devout devour foul (fowl) shower mouth allowance an nounce arouse endow tower. b 2-,
Text Appearing After Image:
^ ff£ Lp< ■erofttttjj. (ft M.-VV ^_v^/-—-iL-y—-—- -w—* /J. -~— -» -^ L-,/*-o /% ^1 V-y T BUSINESS SHOBTHAND. 59 LESSON 9. SUPPLEMENTARY EXERCISE 2. Write the following- words in accordance with the princi-ples illustrated and explained in Lesson 3 and previous Lessons. 1. Beacon bedew belie apiece appears geese Eden deemseaten (Eaton Eton) tease veer fees sheaf sheathe seethe siegebeseech merely needy neatly niece (knees) anneal veneer ob-lique lean-to legion leach (leech) leeway rear arena outreachhero cohere jeer cheery. 2. Keenly deepen deacon decays Deity deafens (deafness)deify deny teal zenith zeal scenery senior thieves meek oat-meal mealy repay reek (wreak) bereave wreathe revere weepweaken weedy wean (ween) heave cheeky achieve wheeze be-liever believing unbelief unbeliever. 3. Bins abyss bilge billowy pithy pickax picnic pink pillagegiddy dizzy dimly fib figs affix filch shin shilling- ethics thickenthickly amiss lives liver livery living lynch lingo links (
Note About Images
Please note that these images are extracted from scanned page images that may have been digitally enhanced for readability – coloration and appearance of these illustrations may not perfectly resemble the original work.
Find More Annuity Articles