Insurance: Expert Guides and Resources

Assess your personal situation and follow some basic guidelines for determining if an annuity is right for you. After you decide to buy an annuity, figure out how to shop for annuity contracts and how to use one to make your retirement years financially safer.Tips for deciding on an annuityIf you’re considering an annuity, take a serious look at your personal situation.

Health insurance, car insurance, and life insurance are a part of everyday life. Making a list of all your insurance policies helps you keep track of them, and also serves an important purpose for your loved ones if the day comes when your life insurance policy is activated. You may also want to review your umbrella policy and fix any gaps in your coverage.

Although insurance companies usually assume your interest-rate risk when you buy a fixed annuity, that’s not always the case. With a market value-adjusted (MVA) fixed annuity, you assume the interest-rate risk. In return, the insurance company can afford to pay you a slightly higher interest rate than it pays on non-MVA annuities (book value annuities).

A fixed deferred annuity is the insurance industry’s version of a savings account. The annuity helps you earn a modest rate of interest safely, and allows you to postpone the payment of income taxes on your earnings for as long as you want.When you buy a fixed deferred annuity, you’re indirectly lending money — without taking the risk that the borrower won’t pay you back.

Fixed deferred annuities offer safe, but low, returns and tax deferral. Risk-averse investors buy them when they offer higher interest rates than CDs, when the stock market is declining or appears headed for a fall, and when they’ve already parked as much money as possible into other savings vehicles, like employer-sponsored retirement plans.

Although fixed deferred annuities are a relatively safe investment, there are also reasons why people tend to shy away from them. They include the following: Low liquidity: Generally, if you take more than 10 percent of your money out of your fixed annuity during any single year of the surrender period, you pay a charge.

The single-year guarantee fixed annuity is like an adjustable rate mortgage in reverse. With this annuity, the insurance company promises to pay you a certain rate of interest for one year. But each year until the contract expires, the insurance company can raise or (more commonly) reduce that interest rate. The new rates are called renewal rates.

The majority of individuals and families have health insurance through their employers. You’re likely best off with your employer’s group plan than any other option available to you. Group coverage is easier and much less expensive to get than private insurance. Plus, your employer may pay most or all of the cost for you, and you can’t be denied coverage.

When you’re in a car accident, it’s easy to forget what information you need — you’re shaken up and rattled. But for your insurance company and that of any other people involved, carry a copy of the following list in your glove compartment so that you get all the information you need to protect yourself and expedite your insurance claim.