Some Of The Nuances to Consider When Choosing The Right Fixed Annuity

Fixed annuities are no more alike than the people that buy them. Some people want a payment for the rest of their life and others simply love the idea that their money grows at a guaranteed rate tax-free. In order to find the best annuity for your needs you need an annuity quote. annuity quotes are free but they can make the difference of thousands of dollars over your lifetime and the lifetime of the contract.

Each annuity offers something different for the consumer. Rate of return is often the most interesting for many but that too depends on how you use the product. Checking the rates of several companies for the way you use the annuity simply makes sense. The easiest method is to use an annuity quote site that offers annuity quotes from several companies at one time.

People that want a fixed contract to act like a tax-deferred account but don’t intend on taking the money in payments need to look for different types of benefits than the person that simply wants a monthly, quarterly or annual payment. The annuities that simply set and grow are deferred annuities. This means you defer the payment to a later date.

Of course, if the person selects a deferred annuity, it doesn’t mean they never want payments from the contract. They may want to avoid taxation until they retire and then take payments later. This is possible. If you select deferring payments, check both the immediate interest rate and the guaranteed rate.

The immediate rate is normally a higher rate of interest than the guaranteed rate. The guaranteed rate is the lowest return the company can give you. This makes the product superior to CD’s that have no guarantee on renewal, particularly in times of lower interest rates. Look at not only the high immediate rate but also the length of time they pay it and the guaranteed rate of the contract.

Surrender fees schedules are important to check when purchasing a fixed deferred annuity. The surrender fee is a percentage of the lump sum invested based on the number of years you hold the annuity. The length of time varies but some companies always have a surrender fee unless you annuitize, turn the policy into systematic payments.

Just because you’re within the period of surrender fees, it doesn’t mean that the money is unavailable if you have an emergency. Like a CD, you can remove all your interest without penalties on most contracts. Unlike a CD, however, most companies allow at least a ten percent penalty free withdrawal once a year or at least once in the contracts lifetime. Look for the penalty free withdrawal ability on the annuity quotes. It means you don’t have to keep a lot of emergency money in a low interest taxed savings account.

Remember that if you remove funds from an annuity before you’re 59 , the government also imposes an early withdrawal penalty. The penalty is equal to ten percent of the growth in the policy just as it is for any other type of retirement account. One way to avoid this is to take systematic payments for five years or until you turn 59 , which ever is longer.

For those that want an immediate payment, the best method to find the highest payout is through securing annuity quotes. Just because the product offers the highest rate of return for deferred money, doesn’t mean it offers the highest payment. That’s a different interest rate. An annuity quote gives you the exact amount of money you’ll receive. The difference could be thousands of dollars over the lifetime of payments.

John C. Ryan has authored hundreds of articles, in an attempt to better inform investors of their options for annuity insurance. Annuity insurance is a important decision in most retirees life. Click on the links to receive more information, and the latest, best annuity quotes