3 Steps to Find the Best Annuity Rate Insurance Agency is an option to help you secure your financial future. If used correctly, they can be an economic boon when you retire; however, it can be challenging to find the best annuity insurance agency you can trust. After all, most insurance companies don’t exactly have a reputation for being forthcoming. We’ll provide you with the essential information you need in a step-by-step format to find the best annuity insurance company for your needs.

What Is an Annuity?

Before diving into what you should be on the lookout for in an annuity company, it’s essential to have a firm grasp of how annuities work. That way, you’ll be in the loop concerning your financial obligations and what you should expect from your insurance company. 

In its simplest form, an annuity is a contract agreement between you and your insurance company. You pay in installments called premiums now, and your insurance company will make periodic payments to you later, most often during retirement. You can purchase them from life insurance companies, banks, and insurance agencies. 

Generally, you get more out of an annuity than you put in because the lump sum (or series of payments) you input is tax-deferred, meaning that you don’t have to surrender any of it to the taxman when you withdraw it—an appealing idea for individuals in a higher tax bracket.

Fixed annuities are more dependable, offering guaranteed payments over a set period of time, while variable annuities can potentially generate more income if the investment performs well. Immediate annuities start paying out as soon as you buy them, while deferred annuities provide income payments beginning at some point in the future.

Three Steps to Find the Best Annuity Rate Insurance Agency

Of course, it’s not enough to simply understand how annuities work. You also need to make sure that you find the right plan and company willing to work with you, lays out the details of your annuity transparently, and commit by contract to paying you as an annuitant. 

An annuity, like any investment, is a bond of trust since, in most cases, you’re relying on the annuity rate insurance agency to provide you with a deferred return on investment. With that in mind, here are 5 steps you can take toward securing your financial future.

Step 1: Know Thyself

Before you dive into the headache of researching company values, business ratings, and annuity offerings, it’s important to recognize which type of annuity is best for you. Remember that annuities are meant to provide a stable, dependable return on investment when you retire; they will not make you a millionaire overnight.

To discover what you want, you might consider asking yourself the following three critical questions:

  • Do I want to commit to an annuity?
  • Do I want a fixed or variable annuity?
  • Do I want an immediate or deferred annuity?

These three questions can help you discern whether an annuity suits your needs and what type is best for you. Remember that when you put money into an annuity, you may not be able to withdraw early (although some companies allow partial withdrawals) without incurring fees.

Contracts that don’t provide lenient withdrawal provisions may offer higher rates, but it’s vital to assess whether you are financially stable enough to commit to the premium rate. If so, decide how much you want to invest. 

The adage “you get out what you put in” holds true about annuities, so you should certainly put some thought toward how much you can put in—with the understanding that you won’t be touching that money again for 5-10 years. That is, of course, assuming you want to maximize your return on investment. 

Understanding what you want helps narrow the playing field since some insurance agencies might not offer annuities or the type of annuity you need.

Step 2: Shop by Comparison

As with any significant financial commitment, like buying a home or a car, it’s important to shop around for highly trusted insurance companies. They should have at least an A- rating with the Better Business Bureau. A handful of good testimonials on third-party sites is a favorable sign, too.

Once you’ve assessed the company’s reputation, you’ll also want to consider its financial wherewithal. AM Best is an excellent resource for identifying which insurance companies are most likely to be able to repay their financial obligations. As you’re trusting the company to provide you with a return on your hard-earned money, this step is important.

Keep in mind, however, that resources like AM Best provide helpful data about the insurance company’s likelihood to repay its debts, but they do not speak to the merit of an individual annuity plan. Lastly, you’ll want to review your narrowed-down list to see what terms your prime candidates offer on annuities. 

Annuities are relatively safe investments that “lock up” your money in exchange for the promise of a fixed income, generally avoiding the market volatility associated with other investment options; however, depending on the type of investment, insurance companies can set their premiums differently. As a result, the money you get back may be subject to change—something you should understand as you shop by comparison.

Step 3: Seal the Deal

Once you’ve narrowed down the shortlist of insurance companies you can trust and determine what annuity plan you’re most interested in, it’s time to contact each to see their offerings. Speak with your insurance agent and outline your needs to ensure you fully understand your responsibilities and what the insurance company is willing to commit to.

If their interests align with yours and you’re happy with the annuity they’ve offered, then you’re all set to seal the deal. Ensure you understand the crucial details, such as when you’ll start receiving payments and whether there’s a surrender charge schedule, and read your agreement carefully before signing.

The Bottom Line

Annuities are a well-reputed, highly competitive, and safe money option for retirement. Whether you’re still a decade away from retiring or are planning your retirement in the next few years, an annuity is an option to consider for a stable income. To find the best annuity rate insurance agency, evaluate what you need, shop by comparison, and, lastly, seal the deal with a company you trust.

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