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Planning your financial future

3 key considerations for selecting an annuity

With the purpose of generating guaranteed income, choosing the right annuity can be challenging.
Annuities are issued by life insurance companies and sold by insurers, brokers and financial professionals. They are unique in that they can help provide peace of mind for people looking for a guaranteed stream of income in retirement that they won't outlive. But what should you look for when selecting an annuity?

While there are a number of checkpoints for selecting the right annuity, these considerations can help to point you in the right direction:

#1: Select a reputable and financially strong insurance company

An annuity is a long-term arrangement between you and the insurer. Before you settle on an annuity, check the life insurance company's financial rating to ensure that they'll be around for the long-haul. Similar to consumer credit bureaus, there are several insurance rating agencies such as A.M. Best, Moody's, Fitch Ratings, and Standard & Poor's that can provide you with an indication of an insurance company's financial stability. Note: Not all companies are rated by all the agencies, and they each have unique standards and rating methods. Be sure to review more than one agency's rating before making a decision.

#2: Check with your State Guaranty Association

All insurance companies licensed to sell life, health, or annuities in a state must be members of the state's guaranty association. This provides a safety net for the funds from your annuity  up to the state's maximum amount  in the event the insurer is unable to pay the benefits in full. However, it's a good idea to understand just how much of your annuity contract your state's fund would cover, including any dollar limits that may apply.

#3: Shop and compare

When it comes to annuities, you have many options in which to choose from. The right annuity for you is the one that meets your personal and financial objectives. For example, are you looking for an annuity to provide you with a lifetime of retirement income, income for your survivors or heirs  or perhaps both? Do your homework before you decide on an annuity and consider consulting with a financial advisor who can help you find just the right annuity based on your needs. Finally, be sure that you understand what fees will be associated with your annuity selection.

Getting the help you need

If you're feeling unsure about making an annuity selection on your own or if you need more information and personal guidance, speak with a qualified financial advisor or life insurance representative.


Sources used in the development of this article include: Insured Retirement Institute.



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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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