Start with the goal, not the product
An annuity is an insurance contract that may be used for accumulation, income, principal protection, or a combination of goals depending on the product. Different annuities can have very different crediting methods, income features, surrender periods, fees, liquidity rules, and guarantees.
Before discussing a specific option, Levi starts with what you want the money to accomplish, your time horizon, how much liquidity you may need, and what tradeoffs you are comfortable accepting.
Topics worth understanding before purchase
- How interest or index-linked credits are determined
- Any surrender-charge period and available penalty-free withdrawals
- Income options, riders, and whether additional charges apply
- How guarantees depend on the issuing insurance company
- Tax considerations that may apply to withdrawals or distributions
- Whether an annuity is appropriate for the money you are considering moving
Annuities are long-term insurance products. Guarantees are subject to the claims-paying ability of the issuing insurer. Withdrawals may be subject to surrender charges and tax consequences; tax treatment depends on individual circumstances. Porchstone does not provide tax or legal advice.
A careful review before paperwork
The purpose of a coverage review is to make the contract understandable before you decide. If an annuity is not a fit for the goal or liquidity you need, that matters just as much as understanding when one may fit.