Getting an Annuity Quote? Some Things to Consider

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About Derrick Loflin

Derrick Loflin specializes in helping individuals and families prepare financially for retirement with the proper Safe Income Planning Strategies, educating clients on options to generate more retirement income and how to not only securely protect their money but also provide strategies to grow their money during uncertain economic environments.Derrick’s career in the Financial and Insurance Industry started a few years before the 2008 economic crash. He has more than 15 years of experience helping people protect and grow their money. Derrick has assisted hundreds of individuals and couples over his career by creating a solid financial foundation, as well as generating a secure retirement income that they cannot outlive.

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.

Another vital concern when buying an annuity is the insurance company’s financial strength. Several reliable insurance rating services grade the financial strength of the issuing insurance company. It’s something you want to assess when you get an annuity quote.

The ratings assigned to the insurance company help the investor understand the financial strength of the individual insurance company. These rating services are AM Best and Company, Standard and Poor’s, Fitch, and Weiss Research.

Ratings are important and financial stability should be considered as part of your decision to invest in an annuity. However, other factors are to be considered, such as the type of annuity you are considering and the annuity benefits.

Annuities can be for immediate income and longer-term savings. Annuities held for use at a later date have a desirable feature; interest accumulated is only taxed once it is touched.

This feature means your funds grow tax-deferred until a later date. Deferring the tax until the funds are needed allows you to earn interest on your deposit and earn interest on the tax you would have paid. By deferring for an extended period, your funds will accumulate faster.

When you get an annuity quote, know which type of annuity interests you.

The primary things to consider when obtaining an annuity quote are:

  • 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.

Variable Annuity: If you consider an annuity issued as a security, the salesperson will supply a prospectus. In the prospectus are all of the important issues of the annuity. The prospectus includes charges, expenses, time surrender periods, and investment options.

When considering getting a quote on a Variable Annuity, there are several things to ask the broker.

  • 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?

Shopping for annuities can be like buying a car –it can be intimidating. Consider all aspects of the annuity and fully understand the benefits and limitations. Remember, not all annuities are for everyone; make sure your choice reflects your goals, and take your time deciding. A solid advisor will be able to guide you through your options.

 

Many people have learned about the power of using the Safe Money approach to reduce volatility. Our Safe Money Guide is in its 20th edition and is available for free.  

It is an Instant Download.  Here is a link to download our guide: 

Safe Money Guide – Annuity.com

About Derrick Loflin

Derrick Loflin specializes in helping individuals and families prepare financially for retirement with the proper Safe Income Planning Strategies, educating clients on options to generate more retirement income and how to not only securely protect their money but also provide strategies to grow their money during uncertain economic environments.Derrick’s career in the Financial and Insurance Industry started a few years before the 2008 economic crash. He has more than 15 years of experience helping people protect and grow their money. Derrick has assisted hundreds of individuals and couples over his career by creating a solid financial foundation, as well as generating a secure retirement income that they cannot outlive.

View The Best Annuity Rates Available Now

Annuities are a safe and reliable investment. They can transform your savings into a more predictable income. Speak with one of our qualified financial professionals today to find out how an annuity can offer you guaranteed monthly income for life.

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Content in our posted articles is deemed to be accurate but topics, facts and laws can change. It is always a good idea to verify facts before making decisions. Always seek authorized and professional advice regarding financial decisions which includes investing, annuity purchases, tax planning, changes in a financial portfolio and retirement planning.

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