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Annuity 101

A lot of people find themselves in an annuity by accident, so if it’s happened to you don’t worry! It happens all the time. Some financial advisors earn a commission off of getting you into annuities! Especially if insurance or annuity is their primary thing, they may not be giving you a good idea of […]

A lot of people find themselves in an annuity by accident, so if it’s happened to you don’t worry! It happens all the time.

Some financial advisors earn a commission off of getting you into annuities! Especially if insurance or annuity is their primary thing, they may not be giving you a good idea of what you’re buying

So how can you tell you’ve bought an annuity? If your statement says annuity on it! If you aren’t sure, you can always call the 1800 number and find out.

Let’s talk about what an annuity is.

Basically, they can offer a guaranteed income stream for the rest of your life or a certain step up based on how much you have invested. But remember: it’s not free money, it’s based on what you have invested and there are rules around what you can take out.

The number one problem that comes up is most people are sold an annuity by someone who didn’t properly explain everything and the buyer didn’t know what questions to ask. 

If this happened to you – don’t worry. Let’s see if it’s the right fit for you or if your money would be better served somewhere else. 

Call the annuity firm and talk to someone about these questions.

  • Is there a surrender fee if you give up the annuity? 
  • Ask how much you are paying for all of the various fees associated. 
  • Ask “What am I getting from each of these fees?” Some may have guarantees or riders, which are benefits of the annuity.

Have them explain any benefits and why they recommend you keep your annuity. Remember that these are salespeople and this is their job, but make sure you understand what they’re saying! 

Consider getting your financial advisor on the phone with you to help you understand as well as ask questions. Also, remember to ask what their transfer process is! Different firms handle things in different ways.

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