Episode 138: 3 Questions to Ask Before You Buy An Annuity

Today’s Prep:

Before you buy an annuity (or rule one out), what do you need to know? David outlines three questions that will help you determine whether or not an annuity aligns with your goals and financial plan.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Think an annuity might be a good addition to your financial plan? Before you buy an annuity, there are three questions you’ll want to ask to make sure you know what you’re getting into. David shares the questions you should ask as well as why they are important to understand the answers to.

To start, what kind of annuity is it? There are four types of annuities: immediate, fixed, indexed, and variable. David describes the basic definitions and uses for each of these financial products. Understanding the type of annuity you have will help you better determine how it fits into your financial plan.

Before you buy an annuity, make sure you know how much it costs. Immediate or fixed annuities usually don’t have fees after the costs involved. Index and variable annuities often come with annual fees that help pay for additional benefits that you choose. Some of the costs are small, while others are large. Make sure the price you’re paying is worth the benefit you’re receiving.

Finally, what happens to your money after you pass away? Will the money go away, too? Or will the benefits pass onto your beneficiaries? This all depends on what kind of annuity you have. The account value is what goes to your beneficiaries if it does pass on. Make sure that as your life changes and your heirs change, that you keep your beneficiaries up-to-date.

Annuities are a financial tool that you may or may not need to accomplish your goals in retirement. So, are annuities good or bad? Annuities are good at guaranteeing results, but the cost tends to come in lower returns. It’s important to work with a financial advisor to ask the right questions and get guidance on what’s the right choice for you.

Listen to the entire episode or skip ahead using the timestamps below.

[1:32] – What type of annuity is it?

[4:48] – How much does this annuity cost?

[8:57] – What happens to my money when I die?

[12:08] – So, are annuities good or bad?

Today’s Takeaway:

The best time to ask questions about sometimes complex financial instruments are before you own them.”

– David Dickens

Additional Resources:

PODCAST: What To Know About The 4 Types Of Annuities

PODCAST: Good Or Bad – Annuities

PODCAST: Keys to Diversifying Your Portfolio


More From David:

The host: David Dickens

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