How to Factor Fees and Expenses into Annuities' Rates

When you are looking at annuities rates, ideally you would like to find the annuity that has the highest rate. When you are comparing these rates, you will also have to take into consideration fees and expenses. Here are a few things to consider about how to factor fees and expenses into annuities rates.

Read the Contract

Many times, insurance companies are not going to be very forthcoming about all of the different fees that are charged with your annuity. In order to find out how much you are going to be paying in fees, you need to make sure that you read the annuity contract. The contract should outline if you are going to have to pay a margin, an annual fee, or some other type of cost.

Calculation

Whenever you have determined what types of fees and expenses are charged, you need to determine how this is going to affect your investment. For example, if you see that you are going to be charged a 3 percent margin on your return, you will need to subtract 3 percent from the rate that is projected to be earned. If you are going to earn 7 percent, after subtracting 3 percent, you will only have 4 percent left. 

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