Tips when making an Annuity Purchase

2007-03-08 10:33:40

( Financial )



An annuity is a financial product that an individual purchases usually for retirement purposes. The term annuity refers specifically to the cash you receive on a regular basis that is a result of a one-time lump sum investment on your part.

An annuity purchase is recommended while you are still relatively young so your lump sum investment reaches maturity slower and earns interest over a longer period time. This way, you will receive greater returns for your annuity purchase.

If you are considering an annuity purchase, here are some helpful tips to help you get more mileage out of your hard-earned money:

FAIR TIPS

Do surveillance.
If you are going to buy annuity, look at the companies that are offering annuity products and look at their history as a financial services provider. Avoid companies who employ strong-handed selling tactics, they are only concerned with closing a sale and have no regard for your needs. When it comes to making an investment, going for the tried and tested companies is a safe bet.

Ask the authority.
Ask your lawyer or financial advisor if an annuity purchase will work for you and what type is best for your situation. Make sure that the person you are asking advice from has no vested interest in your annuity purchase so you can get an unbiased advice.

Know what you are buying.
This is the most important. Before you buy annuity, make sure you have a solid understanding of what it is, how it works, and what risks are involved in the annuity purchase. You have to make sure that the benefits you will receive from the annuity purchase are far greater than the total investment on your part. It is not only about the pension you will receive. You have to factor in the costs, taxes, and penalties of an annuity purchase. You can also ask for additional features that can be packaged into your annuity plan.


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