You should know your variable annuity contract before changing it. When you have a variable annuity contract, a broker may be tempted to offer you the opportunity to exchange your contract for another. Should you consider this? Maybe, but it may not be the best for you.
The problem with exchanging one contract for another is that the broker or agent can twist a story to make it look very attractive. The thing to keep in mind is that the grass is not always green on the other side of the fence. Your contract may offer the same or better benefits that can be added after the variable annuity purchase.
That’s right; many companies offer the opportunity to purchase the newest benefits to existing variable annuity policyholders. Many times the agent does not realize this or simply wants to earn a commission. When that’s the case, that part is outside the sales pitch. The availability of new features that your current annuity company does not offer, or in the rare event that the insurer is in financial trouble, are really the only reasons to change variable annuity contracts.
You should never, never exchange one variable annuity for another if it is still subject to a deferred sales charge or penalty. Many brokers tell you that you can offset the surrender charge with a new “bonus” variable annuity. The fact is, you will never make up for that penalty you may receive. All you’ve done is quit one contract for another that has longer surrender charges and / or higher fees.
The only acceptable reason for a penalty is if the current insurance company is in extremely bad financial condition. Other than that reason, maybe it’s just a reason for the agent to generate another commission.
If you are considering swapping one variable annuity for another, be sure to do so for the right reasons. If it is for the opportunity to make a better profit, make sure that your current company does not offer that benefit. Also, make sure you get the best bang for your buck.
To make a comparison of the annuity offered, you must obtain the Annuity Report that I offer. I show you exactly how the benefits and costs associated with them work. You need to know the facts, especially when switching from one annuity to another. The sad reality is that trading annuity contracts is big business and there’s a lot of money in it.
Always make sure you get the correct information the first time. Research, compare, and evaluate variable annuities at your own pace, without a salesperson. Read the “Annuity Report”, get the facts, and don’t be fooled.
For more information on variable annuities, visit: http://www.annuityiq.com.