A good website for annuity information is: http://www.annuityfyi.com/
If you are considering switching annuities for the "latest model", FINRA (the financial regulatory agency) recommends knowing the answer to these questions first:
(1) Is the current death benefit or living benefit greater than the surrender value?
The new annuity may restart surrender charges and surrender periods again.
(2) What are the surrender charges expressed as both a dollar amount and a percentage?
This is a real cost to you to get out of the old annuity that would have to be made up by the better return rates of the replacement.
(3) How long was the variable annuity held that you are thinking of trading in?
Investments held in stock accounts are a longer-term plan and, possibly the surrender charge period has finally been reached or charges are low if more than 5-7 years have passed.
(4) What are the fees (MEA, Benefits, Sub-Accounts Fees, Asset Allocation Model Fees) of the new / proposed variable annuity as compared with the existing one?
So important to compare fees and rates of return. Do not confuse a distribution rate with rate of return. They are very different since during distribution (annuitization) you are getting your own money back as a part of the monthly payment. Be very careful and do not be mislead by high rates.
(5) Is a bonus being offered to make up for any surrender charges?
This is dangerous because the bonus is not "real" money but the surrender charges are real cash. The bonus affects your accumulation amount (income base) and this is different than your cash value. Again, do not be mislead.
(6) How old are you?
FINRA believes that above age 75 the benefits of a variable annuity diminish greatly though there may be some variable products that can make sense for older investors. In addition, if you are under age 50 a deferred annuity may not be a suitable investment unless you have maximized all other avenues of tax-deferral.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.