Annuity Performance & Benefit Review
In-force annuity reviews analyze existing, active annuity contracts to ensure they still meet financial goals, as many investors often do not fully understand the products they purchased. These reviews, often performed by specialists, evaluate performance, check for proper alignment with retirement goals, and determine if the policy is in danger of lapsing.
Key components and considerations for in-force annuity reviews include:
There are three types of expenses in retirement:
- Performance & Fees: Evaluating current, guaranteed, and potential income payouts, as well as high fees or commissions that may exist.
- Surrender Charges: Assessing if taking money out now will trigger high penalties, which can be up to 25% of the principal, particularly in the early years.
- Market Adjustments: Checking if a Market Value Adjustment (MVA) will apply if the policy is terminated early.
- Income Alignment: Determining if the annuity is providing the intended income stream or if it lacks necessary inflation protection.
- Company Health: Reviewing the credit rating of the insurer to ensure the safety of the payout, as indicated by Annuity.org.
Why Perform a Review?
Regularly auditing in-force annuities (e.g., every few years) ensures they still fit the investor’s current financial needs, notes ThinkAdvisor. Common issues found include:
- Lack of Inflation Protection: Fixed annuities may not keep up with rising living costs, says YouTube.
- Undesirable Terms: The original purpose of the annuity may no longer match the holder’s life situation, according to Asset Positioning Services.
- High Costs: The fees for riders or the annuity itself may be higher than necessary for the benefits provided, as discussed on Yahoo Finance.
A professional in-force review can help decide whether to keep, replace, or annuitize the contract to maximize income or liquidity
Contact Information
Address Details
- 2 Charles St., Suite 3A Providence, RI 02903
