- Licensing and Education
- Anti-Fraud Unit
- Public Information
- Regulated Entities
An annuity is a contract in which an insurance company makes a series of income payments at regular intervals in return for a premium or premiums you have paid to the insurance company. Annuities are often purchased for future retirement income.
Annuitization results from your election to receive regular income payments from your contract. Once you choose to annuitize your contract, that decision cannot be changed. If you elect to annuitize your contract, you will no longer be able to change the terms of the payments to you. You will no longer have access to money that you have paid to the insurance company outside of the payment plan that you elected.
Where can I get more information?
Is an annuity right for you?
You should think about what your goals are for the money you may put into the annuity, as well as how much risk you are willing to take. While some annuities provide a guaranteed return, others may involve risk of loss of premium.
Ask yourself the following questions:
Types of annuities:
What is a maturity date?
The maturity date is a date determined when you purchase the annuity. It is the latest date on which you can begin receiving payments from your annuity under any of the settlement options available to you. The date shown on the specifications page of your contract is automatically set as the date when you must begin receiving payments from your contract. The maturity date does not restrict the settlement options provided by the company. You can start receiving payments from your annuity as early as one year after the contract is issued, or at any time thereafter.
Settlement options are explained in your contract, disclosure statement and product brochure. Settlement options are the various ways in which you can receive income from your annuity contract. You may also be able to “annuitize” the accumulated value of your contract any time after the first anniversary date, subject to limitations.
Is the person selling you this product knowledgeable and trustworthy?
Insurance professionals have developed an array of designations and certifications that can be confusing.
The requirements needed to obtain a certain designation or certification vary from having to attend a three-day seminar, and pass a multiple-choice exam [CSA or Certified Senior Advisor], to a designation that is recognized industry wide and has been certified for undergraduate and graduate degrees [CPCU or Chartered Property Casualty Underwriter].
Some designations, such as CSA (Certified Senior Advisor), require no experience. Determine for yourself whether the individual's qualifications and experience meet your needs.
Questions you should ask your agent or the company:
Additional questions to ask for equity-indexed annuities:
Review your contract carefully!
As with any insurance product, always review the contract and be sure you understand the terms and conditions, as these will vary from contract to contract.
Ask the agent and/or company for a written explanation of anything you do not understand. Do this before any free look period ends. This free look period gives you a set number of days to look at the annuity contract after you buy it. If you decide during that time that you do not want the annuity, you can return the contract and get all your money back.
Surrender Charge: A Fee charged to a policyholder when a life insurance policy or annuity is surrendered for its cash value. This fee reflects expenses the insurance company incurs by placing the policy on its books, and subsequent administrative expenses.
Surrender Period: A set amount of time during which you have to keep the majority of your money in an annuity contract. Most surrender periods last from five to 10 years. Most contracts will allow you to take out at least 10% a year of the accumulated value of the account, even during the surrender period. If you take out more than that 10%, you will have to pay a surrender charge on the amount that you have withdrawn above that 10%.
Please click here for information regarding Variable Annuity Surrender Charges
For additional information on purchasing Life Insurance, Health Insurance or Annuities, please visit the National Association of Commissioners (NAIC) website.