A while back I decided to survey current annuity owners to see how many had readtheir contracts.
I was not surprised to find that most people don't read their annuity contracts.
Those who did often still didn't understand them.
So why would you take a long term CONTRACT and commitment with a substantial sum ofmoney involved and not even understand the legal terms of that contract?Unfortunately the answer is this, It can be next to impossible to decipher the legal mumbo jumbo that's inside your annuity contract.
In addition to that many of the crediting methods involved would take a rocket scientist to decipher.
During a discussion with a new client I brought this point up.
The client replied with"Do you mean I shouldn't trust my advisor?" No.
The point is that it's your responsibility tomake sure you understand the benefits and options that your contract can bring you as well asthe down sides.
After all your advisor makes a commission to sell these products and talkingabout the down sides may have been glanced over or worse avoided all together.
The real problem is many clients don't even really understand how a income rider works or how a crediting method works.
They don't understand that the 7% rate they were sold on isn't a real 7% growth but merely a way to exchange the income value.
Income riders are great but they're better when clients understand them.
They do provide a way to get high returns on your money but that money will never be fully available as a lump sum through the income account or withdraw benefit value.
Here's an example of what I'm referring to: I met with a very nice lady, age 71, she had several annuities all from the same company.
Turns out she had taken money from a savings account to purchase one annuity because she thought the money would be passed on tax free to her children because the annuity had a death benefit attached to it.
That was wrong.
Did her agent lie to her? I don't know.
I met with another man who thought his 20% Bonus he received on his Allianz Endurance annuity was money he would walk away with in 10 years.
His advisor failed to make it clear that that money is added to the income value.
It only increases his payout when he takes income.
It isn't a lump sum he can walk away with.
Think about it...
How could a company stay in business and give you and every other client a 20% increase in your account with no risk to you? That 20% by the way is a great benefit it increases the money you can receive over your life quite a bit.
It is not however a check for $20,000 on a$100,000 investment.
Bottom line.
Clients are confused.
You owe it to yourself to read your contract and have an expert who understands help you.
This expert should not be your current annuity guy.
This is your future.
This is your children's future.
Annuities are a great tool in the financial world but if you think they cure cancer you are sadly mistaken.
If you of the majority who has not read every single page of your annuity contract or you don't fully understand the inside workings of it, you must make time and find someone who can clearly explain the benefits and limitations of your contract.
A good place to start is another advisor.
I would verify any information another advisor gives you with the insurance company that your money is currently with though.
It's your money and it's sitting in an insurance product that you simply may have more control over than you think.
I was not surprised to find that most people don't read their annuity contracts.
Those who did often still didn't understand them.
So why would you take a long term CONTRACT and commitment with a substantial sum ofmoney involved and not even understand the legal terms of that contract?Unfortunately the answer is this, It can be next to impossible to decipher the legal mumbo jumbo that's inside your annuity contract.
In addition to that many of the crediting methods involved would take a rocket scientist to decipher.
During a discussion with a new client I brought this point up.
The client replied with"Do you mean I shouldn't trust my advisor?" No.
The point is that it's your responsibility tomake sure you understand the benefits and options that your contract can bring you as well asthe down sides.
After all your advisor makes a commission to sell these products and talkingabout the down sides may have been glanced over or worse avoided all together.
The real problem is many clients don't even really understand how a income rider works or how a crediting method works.
They don't understand that the 7% rate they were sold on isn't a real 7% growth but merely a way to exchange the income value.
Income riders are great but they're better when clients understand them.
They do provide a way to get high returns on your money but that money will never be fully available as a lump sum through the income account or withdraw benefit value.
Here's an example of what I'm referring to: I met with a very nice lady, age 71, she had several annuities all from the same company.
Turns out she had taken money from a savings account to purchase one annuity because she thought the money would be passed on tax free to her children because the annuity had a death benefit attached to it.
That was wrong.
Did her agent lie to her? I don't know.
I met with another man who thought his 20% Bonus he received on his Allianz Endurance annuity was money he would walk away with in 10 years.
His advisor failed to make it clear that that money is added to the income value.
It only increases his payout when he takes income.
It isn't a lump sum he can walk away with.
Think about it...
How could a company stay in business and give you and every other client a 20% increase in your account with no risk to you? That 20% by the way is a great benefit it increases the money you can receive over your life quite a bit.
It is not however a check for $20,000 on a$100,000 investment.
Bottom line.
Clients are confused.
You owe it to yourself to read your contract and have an expert who understands help you.
This expert should not be your current annuity guy.
This is your future.
This is your children's future.
Annuities are a great tool in the financial world but if you think they cure cancer you are sadly mistaken.
If you of the majority who has not read every single page of your annuity contract or you don't fully understand the inside workings of it, you must make time and find someone who can clearly explain the benefits and limitations of your contract.
A good place to start is another advisor.
I would verify any information another advisor gives you with the insurance company that your money is currently with though.
It's your money and it's sitting in an insurance product that you simply may have more control over than you think.