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965 Lloyd Street, Nanty Glo, PA, 15943 - 705 Somerset Street, Johnstown, PA 15901
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814-414-0560

Pennsylvania Educational Estate Advocacy Services

An Educational Service for All Individuals 18 and Older

Answers to common questions and concerns about annuities

I see advertisements not to purchase

There are many people professionals who place ads on TV, in magazines, etc.,  that are not true for your purposes. You always have to determine for your self what is best for you.

9 Common Questions and Answers

 By Josh Melberg


  

9 YES or NO Questions to Ask About Annuities


Do you find yourself researching annuities with retirement income in mind only to find confusing answers and/or conflicting answers? We'd like to help.We identified the top 9 questions our clients ask us and provided you with the short answers here. (Plus a little bit more straight-to-the-point detail if you'd like to read on).


1. Can I lose money?
No
Immediate, fixed and fixed index annuities are guaranteed by the insurance company that issues the contract. Your principal is protected by the claims-paying ability of that company. Of course, excess withdrawals may result in surrender charges and if you are under 59 ½ and make withdrawals, you are subject to additional tax penalties.


2. Will I pay a lot in fees?
No
Unlike Variable Annuities, which have an investment feature (and have fees that can get as high as 8% in our experience), the annuities we promote either do not have any fees for the base contract, or have low fees for additional riders you may choose such as inflation protection, lifetime income, spousal continuation, death benefit, etc. and those fees are typically less than 1% each.


3. Will my cashflow fluctuate?
No
Fluctuating means your income can swing up and swing down from month to month, or year to year, however you have it set up. With the annuity strategies we recommend, your income can only go up, up to provide a hedge against inflation, potentially up due to index-linked interest rates, up for every year you wait or don't turn on income, many ways. Your cashflow will not decrease, that you can be assured of.


4. Will we be able to keep our money if one of us becomes ill or passes away?
Yes
There are many annuities or additional riders that have waivers for terminally ill or premature death situations. There are annuities that may provide double or even triple your income for qualifying healthcare expenses. Many annuities or additional riders offer death benefit provisions as well. A well-researched annuity strategy designed for your specific needs and goals is the best way to go.


5. Can these annuities provide me with income for the rest of my life?
Yes
With a Fixed Index Annuity, you can select the option to purchase a lifetime income contract. Some are structured that way, some add this feature through a rider for an additional cost, but yes, the annuities we work with and strategies we design with you offer an income-for-life benefit.


6. Does my income have the potential to grow to keep up with inflation?
Yes
This is something people often don't think about, but we do. In our annuity strategies, we leverage annuity features and riders to help ensure our clients' income grows as the cost of living increases. We want you to retain the purchasing power of your money.


7. Will I completely lose access to all my money?
No
You do not have to annuitize. You want to make sure you select the right annuity type and features for your own unique situation, but many offer up to an 10% annual withdrawal without penalty (as long as you're over 59 ½ - otherwise you incur a tax penalty) and you do have ability to get more (or all) but you'll pay a surrender charge. (Please note that the annuity you purchase will probably have a penalty period for the first three to 15 years, with a sequentially decreasing percent charged against your withdrawal funds for excess withdrawals or full surrender of the contract. So you should not purchase an annuity with money you think you may need in the near term.)


8. Can I get even more income by "laddering" annuities?
Yes
Oftentimes, with well-planned-out annuity strategies and payout management techniques like we're known for, using more than one annuity for income - engaged at specific points in time - can net most people with higher monthly and annual payouts.


9. Is it really possible for me to get 33% more income^ with Proper Strategies?
Yes
We use unique concepts with exclusive products that less than 1% of agents in the United States have access to. Our highly-trained, qualified and objective financial professionals are given access to these products and our proprietary strategies to help ensure that they are only placed with clients who are most suited to use them.

Will they work for me?

That can only be determined by examining what you have and what your goals are

What to always ask your Professional

What are you making off my sale. What do you make initially and what do you make after the first year if I retain a product with you?

What Risk can you handle?

One question you need to ask yourself is  if I were to lose 20% or more of my principle would I be reassured to be able to recoup that money and live for the rest of my life.

What are the Guarantees?

Another question to ask your professional is what are my guarantees? Is my principle and interest guaranteed not to lose money unless I withdraw it. If I withdraw it will there be capital gains taxes?