Annuity Basics to Remember

Before you buy an annuity, you should know some of the basics – and be prepared to ask your insurance agent, broker, financial planner, or other financial professional questions about what kind of annuity is right for you, what they are, how they work, and the charges you will pay. Before buying any annuity, however, you should find out about the particular annuity you are considering. Request a prospectus from the insurance company or from your financial professional, and read it carefully.

The prospectus contains important information about the annuity contract, including fees and charges, investment options, death benefits, and annuity payout options. You should compare the benefits and costs of the annuity to other type of annuities and to other types of investments, such as mutual funds.

There are some points that you must consider before buying an annuity like:-

	You should do some comparison shopping and consider all of your options. Because annuities are  long-term saving process and different annuities offer a wide range of choices, prices, features and flexibility.
	You should know what are the annuity's surrender fees and from how long are in place? If the surrender fee will be high then you could feel locked into a contract because it is costly to escape.
	You should see the track record of the funding options offered in a variable annuity.
	Several newspapers like Barron's and the Wall Street Journal publish rankings of various funding options on a regular basis, look for strong returns over a three-to-five-year period or more.
	You should enquire about that if you want to change your investment strategy after some time then does your variable annuity offer multiple funding options or not.
	Apart from that you should do thorough calculation and also see the insurance company's rating.