What are Annuities?
Annuities are an insurance product you can purchase that make future pension like payments to you. Annuities can be purchased via lump sum payment or a series of payments.
Annuities are typically used to meet retirement and long term goals.
Who Sells Annuities?
Since annuities are an insurance product, individuals and companies who sell them must be licensed with the Washington State Office of the Insurance Commissioner. Before purchasing an annuity, make sure the seller is properly licensed to do business in Washington by using the Insurance Commissioner’s lookup tool:
- Fixed annuities – Fixed annuities earn interest at rates set by the insurer. The fixed rate is specified in the annuity contract.
- Variable annuities – With variable annuities, the insurer invests your money in stocks, bonds, or other investment funds you choose. If the fund does not do well, you may lose some of your investment.
- Equity-indexed annuities – With equity-indexed annuities, the insurer offers a guaranteed return plus a variable rate based on the return of a specific index (ie: S&P 500).
See our helpful guide on what you need to know about equity-indexed annuities (pdf)
- Do you fully understand the terms and features of the annuity?
- Do you understand all the fees and expenses associated with the annuity?
- Have you consulted with a tax adviser or financial planner to consider the tax ramifications of an annuity?
- Have you consulted with a financial adviser to determine that an annuity is a good investment for you?
- Do you intend to remain in the annuity long enough to avoid early withdrawal penalties?