4 Questions to Ask Before Purchasing an Annuity

Understand what you want from an annuity product before you buy

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4 Questions to Ask Before Purchasing an Annuity

“L” Is for Legacy, and Long-Term Care

The “transfer of risk” aspect of annuities works the same if you’re planning for long-term care or to leave legacy gifts to your beneficiaries. Long-term care annuities should only be used as a supplement to – not a replacement for – traditional long-term care policies. Legacy annuities provide protection of principal while guaranteeing an annual growth (5-6%) that can be left to your listed beneficiaries. Remember that annuities should always solve specific problems.

There are a few important questions you need to ask when considering annuities as part of your portfolio:

  • How much risk am I willing to shoulder myself?
  • How much risk do I want to transfer?
  • What specific problem am I trying to solve? Lifetime income? Legacy giving? Long-term care?
  • What is the specific dollar amount that I want contractually guaranteed?

When I worked with Dennis’ team on the November issue of Miller’s Money Forever and The Annuity Guide, we put together great tools for smart annuity shopping. A prudent buyer will always read the fine print, do the math, and understand exactly what he’s buying before he signs on the dotted line.

A good agent will help you run the numbers and understand the exact costs of what you are buying. Don’t let any agent push you into a buying something you don’t understand. I am a strong believer that an investor is better off with no annuity than with one not specifically tailored to his needs.

As Dennis mentioned earlier, annuities are not the greatest thing since sliced bread, so to speak. They are, however, pure transfer-of-risk contracts. Adding the right annuity to your portfolio can be a good step toward achieving your retirement goals.

Annuities, when allocated properly, can be just that simple.

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Hi, Dennis here again. Before you start asking for quotes on annuity products, you’ll want to do some homework. As you can see from Stan, you don’t want to enter into an annuity contract without fully understanding why you want an annuity and which might be best for you.

To help you get started we’ve put together an easy-to-read report called Annuities De-Mystified. You’ll find our 8-point checklist to find out if an annuity is even right for you, our 9-point plan showing you what to look for when buying an annuity, and an important overview of the risks associated with annuities all within the pages of this timely, must-read report. Click here for your free copy today.


Article printed from InvestorPlace Media, http://investorplace.com/2013/06/4-questions-to-ask-before-purchasing-an-annuity/.

©2014 InvestorPlace Media, LLC

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