Can I actually lose money in a fixed annuity?
Not from the market. A fixed or fixed indexed annuity protects your principal from market losses. What varies is how much it can grow. The things that can reduce your money are surrender charges if you withdraw more than the free amount early, and fees on optional riders. I'll show you all of them up front.
What's the catch with the bonus offers I keep hearing about?
Bonuses are real. They usually vest over several years, and bonus products often come with longer surrender periods or lower growth caps. I'll walk through the actual math with you, not just the headline number.
Do I have to move all of my money to talk to you?
No. Sometimes the right answer is to move part of it, sometimes none of it. A conversation costs you nothing and commits you to nothing.
What is a surrender charge?
It's a fee for withdrawing more than the free amount during the early years of the contract. It usually starts around 7% to 10% and steps down each year until it disappears. Most contracts let you take about 10% a year without a charge.
How are annuities taxed?
Growth inside a non-qualified annuity is tax-deferred until you withdraw it, then taxed as ordinary income. Annuities held inside an IRA follow IRA rules. Withdrawals of gains before age 59½ may also face a 10% IRS penalty. I'm not a tax advisor, so for your specific situation I'll suggest checking with your CPA.
What happens to my annuity when I die?
During the accumulation years, most annuities pay the account value to your beneficiaries, usually without surrender charges. Once income payments start, it depends on the payout option you chose. Options like cash refund or period certain protect your heirs.
Is my money safe if the insurance company fails?
Annuity guarantees are backed by the financial strength and claims-paying ability of the insurance company, which is why I look closely at company ratings from A.M. Best and S&P before recommending anything. I'll show you the ratings for every company we consider.
Are annuities FDIC insured?
No. Annuities are insurance contracts, not bank deposits. Their guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
How much should I put in an annuity?
Usually not everything. A common approach is to use only what's needed to cover the gap between your guaranteed income and your essential expenses, and to keep enough liquid savings for emergencies and opportunities.
Can I get my money out if I need it?
Most annuities allow free withdrawals each year, often 10%. Many also waive surrender charges for nursing home stays or terminal illness. Read the specific contract, because the details vary.
Do annuities have fees?
Many fixed annuities and MYGAs have no annual fee. Optional riders, like income or enhanced death benefit riders, usually charge one, often around 1% a year. Variable annuities typically have higher fees.
How do you get paid?
Like most independent insurance professionals, I'm paid a commission by the insurance company when a contract is issued. It doesn't come out of your premium; your full amount goes into the contract. You don't pay me for the conversation or the review.
Have a question about your money?
Bring me the numbers: a CD that's coming due, a 401(k) you're about to roll over, or an illustration someone sent you. I'll give you a straight read on it. The call is free and commits you to nothing.