hen fixed annuities come up for renewal,at the end of the term, you have a decision to make. Thankfully, you'll have several options as we explained in this post.
Fixed annuities obtained a few years ago could be supplying lower renewal rates than the annuity rates you desired when you first made your investment. to keep your annuity with the same company, you generally have three choices:
a) renew your annuity for the same term at whatever rate the insurance company offers
b) take the one-year rate offered by the company and then see where rates are in one year to decide what to do
c) leave the annuity is an open account at a very low rate but have the flexibility to close it out at any time if you choose
d) annuitize the annuity and begin receiving regular payments
The opposite alternative would be transferring the particular annuity and choosing another insurance annuity to try and find another long-term, locked-in rate guarantee.
From a long-term perspective, a one-year annuity rate lock might not be a bad option. Besides, just about all fixed annuities offer this option. While getting a reasonable return, agreed less than what you expected, you may choose to take your decision next year, in lieu of opting for another annuity company or another annuity with different annuity rates.
You could also secure a fixed annuity which that offers a multi-year rate guarantee. Note all companies offer these. With such annuities, the rate is guaranteed not to change for a period that extends via between 5-10 years. These annuity rates could possibly be offered to you by the annuity company in order to retain your business. when renewing your annuity or choosing a new contract, of course, a new set of surrender charges will apply. Annuities surrender charge schedules and rates vary from one annuity company to another.
Fixed annuities have been created for long-term investors. Within these type of annuities, the regular federal income taxes apply to interest withdrawals and the 10% tax penalty applies in case withdrawals before the age of 59½. Note that no tax or penalties apply when simply moving the funds in an annuity to the annuity of another company. because virtually every annuity has surrender charges, it's best not to move an annuity from one company to another during the term but rather wait till the end of the term.
Before switching to a new company for a fixed annuity, check the renewal rate history. If the agent or company dragged its feet in supplying this information, choose another company.
if you do business with an independent annuity agent, he can shop for you among many different companies to find you the better offers as to rate and terms on fixed annuities. Note that if you deal with a captive agent who only works for one company you may not see a selection of what's on the market.
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