What is an annuity, anyway? Annuities are a set of scheduled payments to a predetermined account. Lotteries can be redeemed as annuities, as are company pensions. However, the most important use for an annuity is for your retirement.
When looking for an annuity you need to consider things like annuity costs, what the best annuity rates you can get are, and what companies pose the safest investment options. You want the best since this is your life-savings you are talking about. Annuities can be great for making sure you don’t overspend and keep the rest of your life secure.
Convinced yet? Keep reading this small annuity guide for some great annuity tips and tricks!
1. Don’t Go With the First Annuity Rate Quote
Some insurers pay higher rates on their annuities than others. It’s a good idea to shop around for better annuity rates, annuity costs, and payouts for your annuity. Payouts can differ by a wide margin, which is a noticeable difference for your investment, so you want to be cautious when investing in an annuity.
2. Use Insurers With The Highest Ratings
You’ll want a robust insurance company to invest with, as you don’t want your income to be cut off if the company goes under somehow. Check with places such as Standard & Poor’s to pick places with high ratings to invest your annuity with. An A+ rated company could still run into trouble, but the more reliable the company, the less likely that is.
You don’t want to go with a company such as JG Wentworth, who uses multiple brands to confuse the fact that they’ve bankrupt twice since 2009. You need to vet the insurance company you use for your annuity to avoid getting ripped off.
3. Diversify Your Annuity Investment
Diversifying your investment in annuities works the same with stocks and bonds. Even if the company you pick is a solid bet, it’s a lot better to invest part of your saving into another solid company. That way you’re laying a stronger foundation for your retirement.
4. States Guarantee Annuities
The FDIC does not cover annuities, but every state has its own guaranty association. These state associations cover annuities from $100,000 to $500,000. Protection applies per insurer, which gives you the opportunity for extra insurance when you invest your annuity across a couple of highly-rated insurance firms.
5. Protect Your Principal With a Fixed Annuity
A fixed annuity provides a guaranteed minimum rate of return. It also gives you a fixed series of payments. These are under terms that you agree on when you buy the annuity.
Fixed annuities take away the risk for you since the insurance company takes the risk on for fixed annuities. Your premiums are invested in fixed-income investments during the accumulation phase. It’s a very safe way to give your retirement some security.
Invest Your Annuity Safely
Choosing an annuity for your retirement is very important. You need to be careful and make sure you aren’t taken advantage of. You want the best annuity rates you can get for your future.
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