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Fixed Annuities: What to Consider When Choosing The Right One For You
If you think you get the same return or features on every fixed annuity then you're in for a surprise. When you take a few minutes to get annuity quotes you'll find they often vary dramatically. That's because some annuities are better for certain situations than others are. It all depends on how you use it and an annuity quote helps find the one best for you.
Each annuity offers something different for the consumer. Rate of return is often the most interesting for many but that too depends on how you use the product. Checking the rates of several companies for the way you use the annuity simply makes sense. The easiest method is to use an annuity quote site that offers annuity quotes from several companies at one time.
They use the annuity as a deferred annuity and need a different type of program than the person that takes periodic payments or wants only the growth from the annuity. An annuity quote helps to narrow the playing field to your specific needs.
Deferred annuities offer the option of annuitizing, taking systematic payments from the contract, at any time. However, most people that use the product in this manner normally like the tax-deferred growth and the ability to put in money without constantly having to renew the contract. This type of consumer needs different features than the person that wants immediate annuitization. They need to check for the highest immediate rate, rate guarantee and other features like surrender charges.
The immediate rate is the interest the company pays for a specific guaranteed length of time. Sometimes the offer is simply a one-year guarantee, other times it's longer. Once that length of time expires, the company has the right to change the rate as to any amount equal to or higher than the guaranteed rate of the policy. To find the highest annuity quote, look for a website that offers annuity quotes from many different companies.
People with deferred annuities need to check for surrender fees before they invest in the product. Surrender fees are percentage of the insurance companies charge if you cash out a policy too soon. Some policies have very small ones, but the average surrender fee is between four and ten percent. They normally decline the longer you hold the contract and eventually disappear. Some companies that offer a high rate of return have a surrender fee that never goes away unless you annuitize. These are best for people that select an immediate annuity or plan to take payments later.
Just because you're within the period of surrender fees, it doesn't mean that the money is unavailable if you have an emergency. Like a CD, you can remove all your interest without penalties on most contracts. Unlike a CD, however, most companies allow at least a ten percent penalty free withdrawal once a year or at least once in the contracts lifetime. Look for the penalty free withdrawal ability on the annuity quotes. It means you don't have to keep a lot of emergency money in a low interest taxed savings account.
Even if you don't have a penalty for taking funds from the company, you might find the IRS has one for you. If you're younger than 59 and remove funds from an annuity, you pay a ten percent penalty on the growth plus any taxes, just as you would with a Roth IRA. If you have an annuity and suddenly need funds, you avoid the penalty by taking substantially equal periodic payments either for five years or until 591/2, which ever is longest.
When you choose to take payments from an annuity, you simply check the payment amount to find the best rate of return. You can take payments for a specific amount of years, over your lifetime or the lifetime of two individuals or for a number of years with a guarantee of return of principal. The easiest way to find the best product is by securing an annuity quote. Annuity quotes from several companies helps you find the best possible payouts available.
About the Author John C. Ryan has authored hundreds of articlesto educate investors of their options for annuity insurance. Annuity insurance is a important decision in most retirees life. Click on the links to receive more information, and the latest, best annuity quotes
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