Finding the Best Annuity Rates
Annuity plans often start out with a good interest rate, but then that rate tends to decrease after the plan's first year ends. To find the best annuity rates, investors must shop around. In fact, it is even possible trade in under-performing annuities for plans with the best annuity rates available - and without having to pay current taxes or costs out of pocket. Due diligence is required to find the best rates, and understanding exactly what annuities are and the different types of annuities on the market will go a long way to helping an investor identify the best options.
What an Annuity Is
An annuity is a plan that provides the means and structure to save for retirement. It is usually sold by a life insurance company and is designed to provide monthly income, either for a specific period of time or for the lifetime of the annuity owner. Banks may also offer annuity plans.
Interest Rates and Types of Annuities
There are deferred annuities and immediate annuities. Deferred annuities are long-term retirement accounts created with the goal of allowing investors to increase their holdings with an eye to providing a steady stream of income in retirement.
Some deferred annuities function in ways similar to a Certificate of Deposit (CD) in that the period of guaranteed interest equals the surrender penalty period. For example, in a five-year CD-type annuity, the stated interest rate will be provided for five years, assuming the investor holds the annuity contract for five years.
There are also annually renewable deferred annuities, which are traditional, fixed-rate deferred annuities. These plans use an interest rate that resets every year at the discretion of the insurer that sells it.
Rates for immediate annuities are impacted by the age and gender of the annuity owner and by the payment options he or she chooses. Immediate annuities start to provide regular monthly payments shortly after the investor deposits funds with the insurer.
Fees imposed on an annuity contract should be a major consideration when attempting to determine the best annuity rates. While no-load annuities appear to have lower costs initially, they lack some of the benefits provided by other types of annuities. No-load annuities do not provide guaranteed minimum income, for example, nor do they offer the expert services of an investment professional.
Using the Services of Professionals
Having a skilled professional available to answer questions and narrow investment-rate options is highly recommended. Independent agents, consultants, and brokers can often obtain the best annuity rates for their clients from insurance companies. Because they are not affiliated with a particular firm and have no stake in steering a client toward that company's products, their efforts work in the client's best interest.
These professionals will often present clients with quotes from dozens of insurance companies for review. Then, after determining the best approach for a particular individual, they will go to an insurance company on the client's behalf and negotiate the best possible rate.
Additionally, before making any annuity investment, a potential investor should check the financial condition of the insurance company, bank, agent, or broker providing the annuity. Checks can be made using the services of reliable consultants.
The contracts of different kinds of annuities should also be compared, along with surrender policies, fees, and any extra costs that may be imposed before a contract is signed.
There are several websites that feature online quote services. These can be consulted to find and compare interest rates for various kinds of annuity plans.
To find the best annuity products request a free, comprehensive quote comparision. Secure your retirement today, Get Started Now.