SUMMARY

1. Not all annuities are created equal.
2. Both advisor and consumer should know how their annuity works.
3. An advisor should ascertain a client’s tolerance for risk, time horizon, and needs.
4. While an incorrect financial decision can soften with time, the senior has less time than a younger consumer and an advisor must be particularly careful with a senior.
5. Crisis waivers, while not readily available on every annuity contract, can waive surrender penalties if certain conditions arise.
6. Stretch IRAs allow a beneficiary to stretch payments, lessen current taxes due, and continue tax deferral.
7. Many annuities offer a 10% free annual withdrawal each policy year after the first year.
8. Annuitization allows for payments to be paid for X years like 10 years or for as long as one lives or as long as the surviving spouse lives.
9. The renewal rate history of a given product can be provided to you by the insurer.
10. Renewal rates for many fixed annuities can be based on either portfolio or the new money rate.
11. An annuity is the only financial instrument that can provide a minimum guaranteed interest rate for the life of the policy.
12. FIAs can give you a percentage of the index gains and none of the losses instead of 100% of the gains and 100% of the losses.
13. FIA earnings are based on crediting methods like annual reset, high water mark, point-to-point, and are based on the cap, if any, the participation rate, and the spread, if any.
14. You cannot know which FIA is the best annuity at the onset since different crediting methods produce different results in different market conditions.