How To Get Out of an Annuity Transaction
Signing papers for an annuity does not mean the purchase is final.
First let me say this: Annuities have gotten a lot of negative press over the last fifteen years and it is not necessarily deserved. All annuity transactions are not bad.
A good family friend illustrates this. She bought a lump-sum immediate annuity. This means she made a large payment up front and received monthly checks for the rest of her life. For someone with more investment experience this probably would not be a good idea. But she knew little. This was a way to get monthly income without managing stock market fluctuations, bond redemptions or advisory relationships.
Annuities do get forced into inappropriate roles however. A few years ago I helped a family member with a CD rollover. The personal banker was selling an annuity as being the same as a CD. That is not true. Annuities are far more complicated.
This happens because annuities historically have paid substantial commissions. I am not exactly sure what the industry scale looks like today. But if you put $100,000 into an annuity the selling firm might get a check for $4,000. I used to work for a broker who said, “annuities are for selling not for buying.” That pretty much sums it up.
If you just left a financial services office with signed contracts, a sixty page policy and a sinking feeling in your stomach do not worry. Free look laws allow you several days at home with the paperwork before your transaction becomes final. This way any questions can be addressed.
Find out about the regulations in your area. Insurance law differs from state to state. Laws can also change over time. But chances are you have at least ten days to decide whether or not to move forward.
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