We work with annuity clients every day and we see the same mistakes made over and over. Here is a quick list of the more common mistakes made that you should avoid.
Buying an annuity based on the company’s name- This is the biggest mistake I see made the most often. Buying an annuity simply because you know the company name is a sure fire way to ensure that you are buying a product that is not competitive. Look at the payouts when buying an annuity instead of just trusting that a big name company is going to be offering you a good deal. Most often, it is the big name companies that are relying on that big name and are not looking to be best in class. They know they name will bring in customers so there is no need to be making a great offer.
Buying from a captive sales person-If you work with a sales person that can only offer one company or if you call a company directly, do you think they are going to tell you if don’t have the best offer? If they only can offer one company, they are going to offer you that product regardless of if it is competitive or not.
Failing to match your need to the right annuity- Maybe you are buying an annuity because you want income in 5 years. If that is the case, make sure you find the annuities with the best income payouts in 5 years. Don’t buy it because someone said it was “the best” or a “great product”. Income payouts are guaranteed so use the company that will guarantee the most in 5 years. In other words, match your need to products that are strong in that area.
Buying an Annuity from a Bank- Banks have very limited product offerings when it comes to annuities. Same concern as using a captive sales person.
Adding a Rider you are not going to use- Riders can be very useful if they are added to address a specific concern but they have fees. If the rider does not address one of your main concerns, do not add it on to your product.