Questions To Ask Yourself When Shopping For The Best Annuity Insurance

Written By: Christopher Paul on December 20, 2009 One Comment

When you shop for annuities, you need to keep your needs in mind from the start. There are many different products on the market but to find the right annuity, you need to find the best annuity for your needs. These tax-deferred products come in all styles, just like cars. Just as with a car, a family of six wouldn’t want a two-seated convertible for the family car, no matter how attractive it is. The same goes for an annuity. Some returns might be alluring but if the basics of the product don’t fit your needs, it’s not the best annuity for you.

Shopping for annuities is much like other shopping. You first need to make a list of the things you find important and then prioritize it. You’re the only one that sees the list so it doesn’t have to be fancy. Knowing what you want helps you to find the best annuity for your situation regardless of whether you defer payment or take an immediate annuity.

When do you need the funds? If you need the money for a large purchase within a year or two, an annuity may not be the best product for your situation. Most annuities are long-term investment, although some offer a surrender period of a year or less. Just like a short-term CD, you get a slightly lower interest rate. If, however, it fits your needs, then it’s the right annuity for you.

Do you want an income or simply a tax-deferred parking garage for you money?

If you simply need a place to defer the interest income and keep from paying taxes on your Social Security, you’ll want to look at the initial rates, rate guarantee period and overall minimum rate guarantee. Those that want an immediate annuity need to check the amount of payment for the selected time.

Do you want it jointly held? Not all annuities allow for a joint annuitant and owner. If you want to make certain that there’s an income that neither you nor your spouse can outlive, this option is necessary.

If you take an immediate annuity, check the wording in the contract. People that use immediate annuities for Medicare planning need different wording than those that simply want a lifetime of payments. In order to qualify for Medicare planning the annuitant or joint annuitant can’t access any of the funds, so any rights for emergency funds negates the contract for this purpose. The person that wants an income for the rest of their life might find this ability appealing, however.

A surrender period is the length of time the company charges a surrender fee on your policy if you remove funds. This is important in the event you might have to access the funds. Even though you never plan to do so, sometimes emergencies occur and you find yourself faced with that as your only solution. Occasionally, a better product that suits your needs comes along and you might want to change. The shorter the surrender period and the smaller the charges, gives you more freedom to do as you wish.

See if the annuity allows additions after the first deposit. Some people have a monthly income they don’t spend but simply let accumulate in their checking account. Some companies not only allow additions, they’ll actually remove the payment automatically from the checking account monthly, quarterly, semi-annually or annually.

Once you know your needs, it makes your annuity hunt so much easier. You don’t have to look at every product on the market, simply outline your perimeters and check for those important needs first. Often annuity quoting sites help you find just those products.

Christopher Paul writes content for best annuity – a growing site dedicated to providing people with unbiased information and advice for their retirement. We provide constantly updated information on market conditions, the benefits, and the myths agents will tell you when looking for annuity insurance.