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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