Buyer's Guide Required
“When considering an annuity purchase,
Annuities can play an important role in long-range retirement planning, depending on a retiree's situation. However, annuities should not be considered an appropriate investment for short-term financial goals. Many annuities are contracts for payments from the insurer that will be deferred for a period of time and then collected in a single sum or for a number of years starting at a date in the future. Annuity contracts often provide that if the purchaser wants to “surrender” – that is, cancel the contract early for a return of the value of the annuity policy to date, then the insurer may impose a surrender charge, or penalty, that is typically a percentage of the account value of the annuity. Annuity contracts vary as to how long these surrender charges will apply. Individuals close to retirement or in retirement should be especially wary of tying up significant funds in deferred annuity contracts with surrender charges that extend beyond 10 years from the date of purchase, or if they anticipate a possible need to access large portions, or all, of the annuity funds during the period of time when surrender charges will apply.
Free Look Period
Consumers should be aware of a company's obligation to perform a suitability review prior to selling an annuity product. This review determines if the annuity product under consideration is suitable based on the customer's financial condition and goals.
“Consumers may have particular questions once they review the disclosure statement and contract,” said Commissioner Badolato. “It is important that annuity shoppers make sure they understand everything in the contract and ask as many questions as necessary until they do.”
For additional information on Annuities, go to: www.insurance.insureuonline.org/consumer_life_fda_ten_tips.htm
For a sample Buyer's Guide for Deferred Annuities, go to:
To make an inquiry or file a written complaint with the Department, consumers may go online at www.state.nj.us/dobi/consumer.htm or call the Department at 1-800-446-7467 or 609-292-7272.