guaranteed growth annuity?

[Kentaro]

Was recently offered this a 5% for a 5 year term. And I can add funds to the account throughout the contract period. What kind of questions should I ask for something like this? thanks.

 

[BigUnc]

1.Most importantly ask about fees,penalties, exclusions,limitations, ,or any other cost related to it. In other words whats in the fine print.

2. ask... ,no,.... demand a list of the companies they invest in.

3. ask for the performance of this fund since it's creation 1 yr. 5 yr. 10 yr. Confirm it with publicly available info.

4. Compare the cost and performance of this fund with similar funds of this type.

5. when can you start drawing income off it

6. Tax liabilities? Are they now or later?

 

[Awilli1055]

1.Most importantly ask about fees,penalties, exclusions,limitations, ,or any other cost related to it. In other words whats in the fine print. Fees is the most important

2. ask... ,no,.... demand a list of the companies they invest in.This will be ok, but it can be invested in anything. They are guaranteeing you 5% because they are betting they can take your money and make more. Depending on how much money you are talking about you may be able to get a piece of this.

3. ask for the performance of this fund since it's creation 1 yr. 5 yr. 10 yr. Confirm it with publicly available info. If the info is from an insurance companies on IM's then it may not be public and you can only get it from them. Since they are guaranteeing you 5% this won't make a difference since 5% will be all you are going to get in most cases.

4. Compare the cost and performance of this fund with similar funds of this type. This is your most important area to check out and where you will lose the most bang.

5. when can you start drawing income off itIf it is an annuity that you ae purchasing now I would assume you are over 65 and retiring and can start as soon as you sing. The most important thing to remember that if you get hit by a bus tomorrow your heirs recieive nothing. I understand there are new products coming out that will ensure that you heirs recieve whatever is left as opposed to the insurance company recieveing everything that is left.

6. Tax liabilities? Are they now or later?

Most annuities are purchased with your 401k balance when you turn 62 and are going to retire. Your tax would be say if you received 1000.00 a month you would be taxed on the 1,000.00 since it is your income or 12,000/ year. If you receive say 100,000 from your 401k and are not disciplined enough to average it out for say 20-30 years then you may want to consider an annuity that will pay you for the rest of your life. just a thought.