Annuities do appear to be tailor made for some people but NOT everyone.

If you are concerned about your:

• Social Security Income becoming taxable
• Probate
• Outliving your savings
• Guaranteed income
• Guaranteed returns

……….or just the general safety of your nest egg; then there is most likely an Annuity out there that can fulfill your need. The problem is there are many different types of Annuities and it is not always easy to find an appropriate specialist to assist you in a suitability analysis.

All Annuities are issued by Insurance Companies and until recently were sold almost exclusively by Life Insurance Agents and Planners. Insurance Agents still sell the majority of Annuities, though more and more are sold through banks each year. The current low yields on Certificates of Deposit have prompted many investors to explore safe alternatives which in turn has prompted banks to make Annuities available to their customers. It is important to understand that even if an Annuity is purchased through a bank, it is NOT FDIC insured. Though the Federal Deposit Insurance Company is quite busy these days, it is backed by the US Government. There are State Guarantee provisions in each state for Annuities and Life Insurance, though Insurance Agents are prohibited from mentioning that fact to solicit a sale.

Suitability standards have been set forth that make it much more difficult for an Insurance Agent to sell you the wrong Annuity for your circumstances and that is a very good thing for the consumer in general. Annuity commissions can vary dramatically from company to company and from product to product and suitability standards try to assure that you invest in the best type of Annuity for you and not the best Annuity for your agent; if an Annuity is even for you at all.

Most captive insurance agents are limited to the products that their sponsoring company represents and Banks are also limited to the insurance company with which they have a joint marketing agreement in place for their customers. Just as a CD rate may be higher at one bank than another, Annuity rates and guarantees also vary from company to company and even state to state in some instances. Current tax deferred guaranteed yields for a 5 year CD style Annuity are from as low as 2% to just over 4% in some states. That is a  very large difference.

Though Annuities are essentially a long term savings deposit with an insurance company, they vary greatly from bank CDs. Deferred Annuities can be converted to a lifetime income stream, are tax deferred and bypass probate. These provisions are very important if you are looking at taxable threshholds from a Social Security standpoint or when your principal is currently being depleted (or it is a fear) to meet current living expenses. Often times one or a combination of more than one of the following types of Annuities can address your individual situation.

• SPDA     Single Premium Deferred Annuity
• FPDA     Flexible Premium Deferred Annuity
• SPIA      Single Premium Immediate Annuity
• Variable Annuity
• ‘CD Style’ Annuity
• Equity Indexed Annuity

It is required that you meet suitability standards as you progress through the process of purchasing an Annuity. Make sure that you know, at the very least, the basics of Annuities before meeting with an expert for an Annuity suitability consult. Whether your insurance agent, a representative at your bank or an Annuity Broker representing 100 no load Annuities conducts the consult by phone; no one is in a better position to help you…………than you.

AnnuityPayment.org is a resource for anyone who desires to learn more about Annuities, their overall suitability, types and nuances