Whether you are buying life insurance or annuities the concept is the same. The analogy to term insurance in the annuity industry is a single fixed premium, guaranteed lifetime annuity. With each additional feature a prudent buyer needs to understand how to “run the numbers” and determine the true cost and benefit to the insured. While the policy may have some fancy language, it may not always be such a good deal as we discovered with the insurance quotes our agent gave us.
Some insurance policies are nothing more than insurance, and some combine insurance with investments. The first step in comparing the two is to determine what the real insurance costs. Then you can look at the investment portion. Many salespeople will push for the latter type of policy because they get paid a much higher commission.
As I mentioned earlier, I like to keep my insurance and investment products separate. This way I can get a better deal and more transparency into the costs and expected benefits. If you’re considering an annuity or you’re just curious, you might want to take a look at our new free report, Annuities De-Mystified. In it you’ll find the 8-point checklist to figure out if an annuity is even right for you and our 9-point plan (mentioned above) showing you what to look for when buying an annuity. The report also includes an important overview of the risks associated with annuities – risks that agents won’t often voluntarily tell you about. Here’s the link for a copy of the report.