How to Select the Right Annuity:  Our Experts Weigh In

Compare on a spreadsheet the costs and features of selected annuities. Consider all of the costs as well as how much money owners can withdraw from the contract each year without a fee. Be certain to completely read through the full details of costs/charges, guarantees, riders, and special features in the prospectus of a variable annuity.

  • Compare the total outlay with the total annual annuity payment in the case of fixed annuities. Be certain to incorporate the time value of money if the payment schedules of the contracts being compared are different.
  • In an analysis of variable annuities, evaluate the total return for the variable annuity subaccounts over multiple time periods (Lipper Analytical Services, Inc., and Morningstar, Inc., both have information to help assess this).
  • Compare the relative financial strength of the companies through services such as A.M. Best. Insist on a credit rating of A+ (or at the very least, thoroughly discuss with the prospective buyer the risks involved in purchasing from a company with a lesser rating)
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM

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