5 questions to ask before you buy any annuity

1. "What happens if I need my money early?"

Ask for the surrender schedule, year by year, and how much you can take out each year without a charge. Make sure the surrender period fits when you might need the money.

2. "What's guaranteed, and what's only possible?"

Illustrations often show a guaranteed column and a projected column. Ask which numbers are contractual and which are assumptions. Base your decision on the guaranteed numbers.

3. "What does it cost every year?"

Fixed annuities often have no annual fee. Riders and some features do. Ask for every fee in dollars, based on your amount, and what you're getting for it.

4. "If there's a bonus, what am I giving up for it?"

Bonuses usually come with longer surrender periods, lower caps, or vesting schedules. Ask how the same contract looks without the bonus, and how the bonus vests.

5. "How strong is the insurance company?"

Annuity guarantees depend on the insurer's ability to pay. Ask for the company's ratings from A.M. Best or S&P, and how long it has been in business.

A bonus question

"Why is this better for me than leaving my money where it is?" A good advisor should be able to answer that in plain English, with your numbers.