What’s the financial health of the insurance company offering the annuity?
Each rating service defines its financial-strength ratings online. For example, at A.M. Best, ratings above B+ are considered “secure.”
What are your spousal benefit options?
Before investing, ask for an annuity’s complete list of spousal benefit options to compare what the feature will cost and how the benefit will be affected.
What are the total charges and annual fees?
Many variable annuities charge a contract fee ranging between $30 and $35 as well as annual expense calculated as a percentage of assets invested. According to Morningstar, the average is 2.44%.
What happens if I die after buying an annuity?
Under the terms of many annuities, your investment may be forfeited to the insurance company or considerably reduced unless you’ve added a feature that protects its value for your spouse or beneficiary.
What are the surrender fees?
Ask what you’ll be charged to cash in your annuity and how the penalty fee declines over time.
Will I pay a penalty for withdrawing a lump sum in retirement?
Some variable annuities will penalize you for pulling all of your assets out in retirement.
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