Wealth Advisors
Annuity education
An annuity is an insurance contract. Depending on the type, it may offer features some people value. It also may carry fees, surrender charges and limited access to your money.
What annuities may offer
Some annuities may provide a stream of income that can last for life, and some may offer tax deferral on growth. Features vary widely by contract and are not available in every product.
What to weigh
Contracts can include ongoing fees, rider charges and surrender charges if money is withdrawn early. Access to funds may be limited, and withdrawals can have tax consequences.
Guarantees depend on the claims-paying ability of the issuing insurance company. Annuities are not FDIC insured and are not bank deposits. Variable annuities can lose value.
Income benefits and account values
An optional income benefit may use a benefit base to calculate withdrawals. That base is not necessarily the cash surrender value or an amount available as a lump sum. Contract conditions and withdrawal limits apply; a lifetime income benefit is not a guarantee of investment returns or a promise that the account value cannot decline.
Annuities are insurance contracts. Guarantees, including guaranteed lifetime income benefits where available, are subject to the claims-paying ability of the issuing insurance company. Product features, fees, withdrawal restrictions, and surrender charges vary by contract.
Read before you decide
The SEC’s investor.gov site explains annuity types and questions to ask. Read the full contract and prospectus where applicable.
Questions worth asking
- 01What are all the fees, including riders?
- 02How long is the surrender period and what does it cost?
- 03How would I get at my money in an emergency?
- 04How is the insurer rated, and what does that rating mean?
Limits and risks
Annuities are not suitable for everyone. Product-specific authority and carrier appointments remain subject to review before publication.
Insurance products are separate from investment advisory services and may generate commissions and conflicts of interest. Purchasing insurance is not required to receive advisory services. Insurance disclosures.
Related article: Annuities: the benefits and the trade-offs
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