Equity annuities pros and cons

How do you select the best variable annuity for your needs? The answer is simple, use the services of that offer several annuity quotes at one time. The annuity quotes often include information about the funds’ returns, the details of the fee structure and interior working of the policy and the available annuity options.
Variable annuities have mutual funds on the interior but they have additional guarantees not available on any mutual funds. The annuity options offer a guaranteed return of principal, lifetime income or guaranteed growth. While the concept is the same for all companies, each company has different requirements payouts and reset provisions.

Some companies set their guaranteed return at a specific percentage. Others offer you the ability to remove a higher percent each year. The baseline the companies use to set the percentage varies also. Some companies use the initial premiums as their baseline and others reset the base at a specific date if it’s higher than the original investment. You don’t have to be a rocket scientist or a financial planner to understand that the higher the amount used to calculate a percentage, the better it is for the investor.

Not all companies offer the most liberal wording and rules on every annuity option. That’s why it’s important to understand how you’ll use the annuity. If you’re going to take funds right away, the guaranteed minimum withdrawal benefit is the right one for your needs.

You can also add living benefits and death benefits both to a variable annuity. For those that don’t want to take the funds but may have to some day, a guaranteed minimum accumulation benefit and a guaranteed death benefit that either guarantees the principle or the principal plus a specific return are variable annuity riders that suit this need.

Annuity quotes help you see how these riders affect your money in real dollars, not just words. They make it obvious which rider benefits you the most. Once you know what you want from your annuity, often annuity quoting sites help you to find the most beneficial rider for your situation.

If you don’t want to add one of these options, that doesn’t mean that seeking annuity quotes isn’t necessary. Annuity quotes give you an idea of the returns the companies experience on their funds and the interior costs of the annuity that might decrease these returns.

Nobody wants to pay too much for anything and you shouldn’t for the management of your annuity. Of course, if the company has far superior investment returns, a slightly higher cost is of no consequence. That’s why an annuity quote is a good idea. You get to see the whole picture in real dollars and cents.

This entry was posted on Monday, February 22nd, 2010 at 8:51 pm and is filed under Equity Annuities. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.