How long has it been since you reviewed your annuity? Did you know that it's recommended to review every annuity annually? As interest rates change, markets fluctuate, and personal financial situations change, there may be a more suitable annuity for you.
There are a lot of factors to consider when reviewing an annuity, including potential penalties to make changes, so it's very important to be thorough in your review! Here are some things I look for with my clients, that you could review on your own annuity:
Can the income be improved? Is the living benefit single but joint would be preferred? If you have gotten married or divorced, this may be different than when the annuity was set up. What is the step-up, and how long could it continue growing?
Do you need more or less of a death benefit than what was initially guaranteed? Can the guaranteed minimum death benefit be increased? Would an enhanced death benefit be desired?
Has your objective for this annuity changed? As the years go on, market cycles come and go, financial statuses change, so can your goals. Your risk tolerance is likely to change over the years, becoming more cautious or more aggressive. This affects both the types of investments you hold within your annuity as well as the types of guarantees you want built in.
This one is pretty straightforward; with new regulations, more public scrutiny, and new products constantly being introduced, there may now be an option that is less expensive than than your current annuity without giving up the benefits you bought it for.
While this may not be a reason to move your annuity elsewhere, it's important to confirm that beneficiaries for the annuity are still current. If there has been a new marriage, a divorce, a birth, or a death, you may want to update beneficiaries.
Pretty much every annuity out there has some sort of surrender schedule; a period of years during which you may be charged a "surrender charge" or penalty if you move your money before the surrender period is over. Usually the surrender penalty gradually reduces over the years, so by the time you get to the last year it may be as low as 1%. You'll want to weigh the benefits of moving your annuity somewhere else with any surrender costs that would be incurred.
I hope these tips are helpful for you! If you're not comfortable reviewing your annuity on your own, please give me a call! I'd be happy to review any current annuities you own, do some research for you, and work with you to see if I can find something that may be a better fit.
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.
Withdrawals prior to age 59 ½ may result in a 10% federal tax penalty, in addition to any ordinary income tax. All guarantees are based on the financial strength and claims paying ability of the issuing insurance company.