|Be careful when it comes
to annuity rates. Let's discuss this in a couple different
First and foremost, when it comes to fixed annuities, there are several
different types of these vehicles. Some fixed annuities have one
rate for the entire period. Others reset each year. It is
wise to know which type yours is and to know WHAT RATE YOU ARE GOING TO
GET throughout the entire holding period. If it is going to
change, you must know what the minimum guarantee is. If it's a
consistent rate, it's important to know if you are getting a bonus the
first year that makes it seem like your rate is going to be higher than
what it is.
And speaking of the bonus (which we will talk more about), how is
the insurance company going to make up for that bonus? Rates can
lure you in and get you stuck in an annuity that becomes very highly
unprofitable. Some insurance companies are notorious for sucking
you in with an attractive first year rate but then renewing at low
rates for the rest of the contract.
When it comes to variable annuities, one usually sees a hypothetical
example of what an annuity would have earned over the last 10
years. This can be very deceiving. Why? Because 'PAST
PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.' Therefore, you
may be seeing something that will never come true for you. Also,
you may be seeing a hypothetical without the fees.
Rates can be tricky. There are many ways numbers can deceive you
and it's important that you know the facts.
To learn more about annuity rates,
please go to AnnuityMD.com.