Are Annuities Expensive?
What would an annuity cost me?
You should know that all financial products have fees. It’s like when you buy a home or a car. The price you pay isn’t just for the house or car itself; it also covers the salary of the realtor or dealer and the fees for processing the transaction.
While each type has a different fee structure, all annuities contain certain insurance-related fees and charges. Keep in mind that there also may be charges or penalties for taking money out early, and, if you withdraw money when you’re under the age of 59 ½, a 10 percent federal additional tax.
Fees and charges may include, but are not limited to:
- Mortality and expenses fees: These are priced into the product and cover the management, sales commissions, administrative expenses and insurance guarantees. (Guarantees are backed by the financial strength and claims-paying ability of the issuing insurer.)
- Surrender charges: If you terminate the policy, or withdraw funds from the accrued value, you would need to pay a surrender charge.
- Sub account fees: These cover the expense to manage the assets in a variable annuity portfolio.
- Rider fees: Various riders typically have additional costs associated with them.
- Early withdrawal fee: If you withdraw funds early, most annuities charge a penalty or surrender charge.
If we can answer any other questions about annuities for you, please give us a call at 801-990-5055.
Our firm assists retirees and pre-retirees in the creation of retirement strategies utilizing investment and insurance products. Advisory services offered through B.O.S.S. Retirement Advisors, a Registered Investment Advisory firm, and offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor. Insurance products and services offered through B.O.S.S. Retirement Solutions. To see a list of services please visit us at bossretirement.com/services.
This content is provided for informational purposes only. It is provided by third parties and has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.We are not affiliated with any government agency including the Social Security Administration.
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