There are a variety of parameters that
you must consider when choosing the
right annuity for you and your family....
In fact, choosing an annuity should
involve the kind of deliberation and
study that a shopper for a worthy
diamond might undertake. But even with
the world wide web at most consumers fingertips
these days, it can still be difficult to sort fact from fiction, especially if you don't know what to ask!
I am currently fearful for a lot of boomers out there who are buying shiny contracts from shiny agents on shiny spring days....and the basis for their choice was a tall number possibly suggested as the rate of return. There were so many other parameters they should have considered as well. I encourage all Ambiguous Annuitants to put on their "AA" capes and start studying..
Let's use the "gemological characteristics" of the diamond analogy here (also known as the "4 C's") and it might make more sense.
1. "Carat" references the actual weight of a diamond. Carat is the largest determiner of value in the stone.
When choosing an annuity, what would represent the truest measurement of weight, or value, in an annuity contract? (I will help you here).
Would you rather have a
rate with the "97 Pound Weakling
Insurance Company", or would you
rather have a so-so interest rate with
"Schwarzenneger and Stallone Insurers?"
I thought so.
This the truest measure of the weight, or value,
or "Carat" of an annuity contract. It is the strength of the
insurer holding up the contract underneath it!
There is a service that compiles insurance company ratings
from the agencies of A.M. Best, Standard & Poor's, Moody's
Investors Service and the Fitch Rating Agency called the
Comdex ranking system. You will often not hear about
Comdex if the agent who is presenting you an annuity
is representing a company with a low Comdex score.
Find out your annuity carriers Comdex ranking, you may be surprised !
2. "Clarity" meaures the degree of internal defects often found in diamonds. These defects are called inclusions which are small cracks that appear whitish and cloudy. The fewer inclusions there are, the better the diamond.
Does your annuity contract have clarity? Is it easy to
understand or are there "cloudy areas" that you are still
Now why am I paying that income rider fee again?
What do I get for that?
"What indexing strategy am I currently in?
"What is the potential gain in my strategy?
Where is this interest rate information on my statement? etc...
Your agent and your contract should be free of "inclusions"
Get Clarity !
3. Color - the highest grade in this category is
when the diamond has "no color", as in
The best annuity contracts have the least
amount of fine print. How transparent is
your annuity ? Is it easy to see through
(or is it pink so you don't even have to put
on your rose colored glasses to see it) !?
-insert smiley here -
How much fine print was there in the
application? Find out !!
The less color the better!
4. Cut describes the quality of workmanship and the
angles to which a diamond is cut in order to reflect the
maximum amount of light. Mathematical precision is
of utmost importance here as even the slightest
deviation will alter the best possible light scattering.
The ultimate experience of diamond ownership is the
"light" that emanates from the gem; the precise cut is
what makes this happen.
Since the ultimate experience of owning an annuity
contract is financial peace of mind, the question begs,
do you have this peace of mind? Are you feeling that
the triumvirate human needs that a good annuity can
fulfill are covered?
Sickness Protection - do you feel your annuity will cover you as you age and potentially need money for long term care etc..?
Income Protection - do you feel your annuity will give you a decent enough income, either though interest, or the annuitization of your accumulated value someday, or a guaranteed income rider?
Asset Preservation.......do you feel SAFE with your insurer, that they will be there for the rest of your life to provide your funds back to you and your heirs?
Do you feel "S N A P P Y" about it all....or is there something still a little off?
You think about it.Till next time..I am signing off - and wishing you the best in your next shopping experience of:
or if you're one of the lucky ones.... BOTH !