By Bill Broich
Like any endeavor or journey, sometimes you need a roadmap to find your way. When dealing with any significant financial decision a great deal of thought and planning should be considered. Not only if an investment is a good choice but does it makes sense for your desired goals. No final decision should ever be considered without the full understanding of all aspects including risks, benefits and tax issues.
When considering an annuity the first approach would be a time commitment. Annuities are not short term choices; they are for people who can allow their funds to be on deposit for a minimum of 5 years.
Step 1 – Getting A Quote. Getting an annuity quote from a local agent is normally the first step. Typically finding out how much interest is available for an annuity. Annuities are sold by two very and distinct marketing groups.
Stockbrokers: They sell variable annuities which are considered securities.
Insurance agents: They sell fixed interest annuities and they are considered insurance products.
If you are interested in earning an interest on your money, then a fixed interest annuity could be the logical choice. Getting an annuity quote from an insurance agent is a simple affair, generally it is best to obtain several quotes from several agents.
We have a form on this page where you can request an annuity quote and our SAFE MONEY book if you feel ready.
Once you have decided on an annuity next comes…
Step 2 – The Annuity contract: Annuities are contracts. Everything that benefits you as well as the contractual restrictions are in writing. Annuities are legal and binding contracts but they do allow the purchaser to end the annuity and they do NOT allow the insurance company to do so. While they are contracts, they favor the annuity purchaser not the insurance company.
The agent will provide the paperwork and forward the signed contract to the insurance company along with the deposit for issuance.
Step 3 – Documents: The insurance company will provide the annuity buyer with a copy of all signed documents as well as a receipt for the deposit. If the annuity is an interest earning contract, the contract will show the amount of interest and the term the interest will be paid (such as 5 years).
Step 4 – Annual Statements: Once the annuity is issued, the insurance company will send an annual statement explaining how much interest was earned and what the current account value is.
Annuities are contracts and as such a beneficiary can be named. In the event the beneficiary was to inherit an annuity, probate expenses can be avoided. This means funds will flow almost immediately to the named beneficiary.
Once the term of the annuity contract is reached, the insurance company will allow the funds to remain on deposit until the annuity owner decides the future use of the annuity funds.