3 Considerations in Comparing Fixed Annuity Rates

When comparing fixed annuity rates, there are several different things that you will need to think about.

1. Fees

Just because an insurance company advertises a certain interest rate on an annuity does not mean that you will be able to bring in that much money without any exceptions. Many times, an annuity company will take their fee out of the returns from the annuity investments. This means that you need to make sure that you understand whether the fees will be coming out of this interest rate.

2. Length of Term

Something else to consider is the length of the annuity term. Some annuities will provide you with a particular interest rate for the rest of your life. Other annuities will guarantee you this payment only for a particular period of time, such as 20 years. Make sure that you understand exactly how long they are promising this rate of interest.

3. Guarantee

You also need to ask the company if this rate of interest is guaranteed by anything. Some states will have guaranty pools that will back these insurance company annuities. However, some annuities are not guaranteed, and you are relying solely on the financial strength of the insurance provider.

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