Once you decide that an indexed annuity is right for you, there are a number of
factors you should consider in evaluating the specific annuity you will purchase.
These include:
Fees and Expenses
The indexed annuity fees and expenses an insurance company
charges can include:
Premium charges deducted when premiums are paid;
A margin, spread or administrative fee, which is subtracted
from any gain in the index before interest is credited to the
annuity;
An annual maintenance fee (e.g., $30); and/or
Surrender charges assessed if the annuity is surrendered or
withdrawals are made.
Carefully evaluate fees and expenses, since they will impact the
amount of money ultimately available in the annuity.
Insurance Company Ratings
Since an indexed annuity is an insurance contract, you need to be
able to count on the financial strength and claims-paying ability of
the insurance company from which you purchase an annuity. Ask
for company rating information from respected sources, such as
A.M. Best, Moody's or Standard & Poor's, before purchasing an
annuity.
Annuity Features
Make sure you understand the terms and limitations of an indexed
annuity contract before you purchase it, including:
the indexing method used and the term of the contract;
the minimum guaranteed interest rate;
the participation rate and for how long it is guaranteed;
policy features such as a cap, whether averaging is used and if
interest is compounded during a term;
any vesting provisions and withdrawal and surrender options;
how the death benefit is determined and the payout options
available;