Reading The Details Of Your Fixed Annuity Contract
The importance of properly reading your fixed annuity contract cannot be understated. The nuances between companies, contracts, and products requires you to have an eye for detail. The subtle differences between one contract to the next can make the difference between thousands and thousands of dollars for you down the road. For this reason you should always read the fine print and fully understand the financial product you are placing your hard-earned money with.
The fixed annuity can be tricky enough without having to pour through page upon page of detailed descriptions. There are a couple of statutes that you should try and look for in your contract, and be certain that you are receiving what you believe you are receiving.
The first thing to fully understand in a fixed annuity contract is the surrender terms. Annuities are notorious for having steep surrender charges. An annuity can be an excellent financial planning product when incorporated into a well-developed financial plan, but can have devastating effects for a fly-by-night investor. Once you purchase your annuity product, you should understand that it will be difficult and expensive to pull your money out of the contract prematurely. Determine what the surrender charges for your specific contract, and understand the effects of pulling your money out early.
Another important feature of annuity products that you want to make sure you understand is the interest rate on the account. The account may have a somewhat variable interest rate, depending upon market conditions. Determine what the minimum expected interest rate is, and any special conditions to any other interest rates. You may determine that the annuity will not perform as well as you would like during the current economic conditions.
If fine combining over the details of financial products is not your strong suit, make sure that you consult with a properly trained and licensed professional. Have them walk you through the details of the contract, and do not let them sell you on anything without them first explaining both the pros and cons of the contract.
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