Annuity FYI Blog

I found an Insurance News Net article listing three very basic questions to ask before purchasing an annuity.  In Maureen McLaughlin’s “Guide Clients Down the Right Annuity-Route,” she says that the questions are just as important for advisors as they are for those purchasing the annuity.  It is crucial for clients to trust their annuity advisors and get the most reliable and understandable information from them.  Understanding annuities can be a time-consuming endeavor, but with the right expert advice it doesn’t have to be difficult.

First of all, you’ll want to decide the type of annuity that will work best for you.  Do you want to receive payments right away with an immediate annuity or use a deferred annuity to grow money tax deferred?  You also have the choice of a fixed annuity or one with variable annuity rates.  Make sure that you know why you are purchasing an annuity product in the first place.  It’s important for advisors to explain all of the benefits offered by annuities to clients and potential clients.  You’ve got to have a long term investment and financial plan in mind.

The last question to answer, and the one that frightens many clients, regards the fees associated with annuities.  Be up front with your clients if you are an advisor; if you are the client make sure to ask for all of the fees to be spelled out for you.  In addition to your annuity rates comparison, you’ll want to compare the fees associated with variable annuities, fixed annuities, and immediate annuities.  By knowing any product fees up front, you can better plan your retirement and use your annuity for a lifetime income stream.

Written by Rachel Summit

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There are far too many myths out there regarding annuities, according to the Digital Journal’s “JD Mellberg Tackles Annuity Misconceptions.”  The best annuities are a perfect retirement vehicle for many people, so JD Mellberg Financial set out to get accurate information about the products to the public.  The first myth is that the stock market is the best place for your money, even with the risks associated with it.  However, there are few circumstances where the stock market is a better investment than an annuity when you are trying to generate retirement income.

Secondly, people have a misconception that annuities are too expensive for them.  When generating retirement income is your sole goal, annuities actually save you money compared to some other investment choices.  A third myth surrounding annuities is that they won’t provide you with the money you need in the event that you get very sick.  Some of the best immediate annuities have options available where your payments increase up to 400% once you reach a predetermined age.  Others give you the option of withdrawing a certain amount of your principal without any penalties.

This amazes me, but the fourth misconception regarding annuities is that only variable annuities exist.  Depending on the fixed annuity rates offered, fixed annuities can be just what retirees are looking for to complete their retirement package.  Variable annuities are great for some retirees, but others prefer the security of a fixed annuity.  Lastly, people have the misconception that annuities are not the best product for most retirees.  While they aren’t perfect for everyone, the market protection they provide along with possible gains and guaranteed income are perfect for many retirees.

Written by Rachel Summit

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Security Benefit Life Insurance Company has introduced a new fixed annuity built for 403(b) plans.  According to a Market Watch press release, “New Fixed Annuity From Security Benefit Life Insurance Company Brings Flexibility to 403(b) Marketplace,” this ‘Total Interest Annuity’ has one really interesting benefit.  This fixed annuity is SBL’s first to allow ongoing contributions of up to $16,500 every year.  You can also use IRA’s or other rollovers to fund the ‘Total Interest Annuity’.

The competitive guaranteed crediting rate will be reset once a year.  SBL hopes that by offering a high initial crediting rate along with a 2% bonus on any contributions during the first year, they will get people to invest early.  This includes a bonus for any 401k annuities or other rollovers.  They want to show that they are committed to the 403(b) marketplace with this new fixed annuity.  SBL is also showing their support for advisors by giving them a product to ease clients’ worry about risk and volatile markets.

Security Benefit has over 200,000 retirement accounts, mostly in the K-12 education sector.  They believe that the ‘Total Interest Annuity’ will help retirees looking for safety and competitive crediting rates.  The product is meant for conservative investors who are trying to get away from high market risk and/or are very near retirement.

The newest product from John Hancock Annuities offers investors protection of their principal and an opportunity for growth to protect from the rising costs of inflation.  A company press release introduced ‘Inflation Guard’ this week.  While it is a typical fixed annuity because it offers the benefit of principal protection, this annuity has more to offer investors.  John Hancock Annuities’ President says that they are happy to grow their line of fixed annuities with this offer of growth to protect against inflation in the country.

Your principal is guaranteed as long as you keep your annuity to the full term of your contract.  In the contract’s initial year, you have a guaranteed fixed interest rate.  Each year after that, you will receive a floating rate based on yearly changes in the Consumer Price Index.  There will also be a guaranteed margin in your contract.  Interest rates cannot go below zero and will be capped at a rate determined in your annuity contract.  John Hancock does a weekly annuity rates comparison and update.

Inflation Guard seeks to meet a customer demand for flexible annuity products that help them combat inflation.  John Hancock believes that they are providing a solution and adding much value to their clients’ portfolios.  Each year, you can withdraw the interest from the previous year without penalty.  While there are no fees or sales charges up front, you will pay a penalty if you take the money out before your contract is up.  Withdrawing money before age 59 1/2 will cause additional taxes to be owed.  Speak with an expert if you are looking for a fixed annuity to help you combat inflation.

Written by Rachel Summit

In collaboration with the Legacy Marketing Group, Phoenix Companies is introducing new fixed annuity products.  Annuity News Journal’s Steve Thompson introduces CommandMark in the article, “The Phoenix Companies announce the launch of a new annuity product.”  Phoenix believes this is the perfect time for an annuity product tailored to consumer need because consumers have been flocking to annuities.  Legacy works with annuity companies to develop products that will best suit investors.  CommandMark is meant for retirees or those who are in the active planning stages for their retirement.  The first fixed annuity has just been released, but CommandMark will be a series of annuity products.

Some of the benefits to investors will be multiple indexing strategies, bonus options for vesting, and different income riders.  There will also not be a penalty for taking out ten percent of the value after the first year.  This is significant because the withdrawal penalties are disliked by many investors.  Different ways to diversify are built into CommandMark.  The Gold Strategy annuity differs from fixed equity indexed annuities because the investor chooses a strategy based on the price of gold.  Other products will have choices based on other investments.  The Average Blended Strategy will be the closest to fixed equity indexed annuities.  The crediting rate will be based on three different indexes followed over a three year period.  Speak to an expert if you think any of these fixed annuity products will be right for you.