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NJ Department of Banking and Insurance Provides Tips to Consumers on Annuity Shopping |
TRENTON – As part of National Financial Literacy Month and National Retirement Planning Week, New Jersey Department of Banking and Insurance Commissioner Ken Kobylowski today offered tips to consumers for buying annuities. An annuity is a contract in which an insurance company agrees to make a series of payments in return for a premium (or premiums) paid. “An annuity is a long term savings contract and shouldn’t be used to reach a short-term financial goal,” said Commissioner Kobylowski. “Buying an annuity may or may not be right for you. Contact a licensed agent or broker to be sure an annuity is the right choice for your long term financial goals. You should seek help from a reputable financial planner to make certain you are on target to meet your goals, especially if you have questions regarding retirement planning.” Annuities can be a key tool for long range retirement planning, depending on a retiree’s situation. There are several types of annuities all of which carry different levels of risk and guarantees. Commissioner Kobylowski recommends understanding the various types of annuities offered, for example:
Buying an Annuity An annuity is not suitable for everyone, and seniors should be especially wary. Before purchasing an annuity evaluate your financial position, income needs and the cost of liquidating any assets. This can help you understand which, if any, annuity is right for you. As with other major purchases, it is a good idea to shop around and compare information for similar products from several companies. While you do your research, keep detailed records and get all quotes and key information in writing. “When you are ready to purchase an annuity, carefully review the contract with your agent or broker,” said Kobylowski. “Ask for an explanation of anything that you don’t understand. Be sure you are aware of all of the terms and conditions, such as investment management fees, surrender charges and any applicable cancellation penalties. Most importantly, make sure all of your questions are answered before you sign on the dotted line.” Avoid Pressure Tactics Never tolerate inappropriate sales practices that attempt to take advantage of consumers. Some typical red flags include relentless sales pitches that pressure you into buying a product quickly for a deal that sounds too good to be true. Protect yourself before signing an annuity contract with an agent or carrier and:
April is National Financial Literacy Month and April 7-11, 2014 is National Retirement Planning Week. As part of National Financial Literacy Month, last week Commissioner Kobylowski spoke with senior citizens in Cherry Hill on a variety of topics, including purchasing annuities. |
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