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Is your annuity a fit?

Salespeople must make sure annuity is a fit for you

A typical annuity buyer, who often is planning for retirement, pays a lump sum of money or makes premium payments in return for income at regular intervals.

Oregon law prohibits salespeople from selling you an annuity without first understanding such factors as your:

  • Financial situation, goals, and risk tolerance
  • Age, life expectancy, and family health
  • Tax consequences

This is to keep agents from selling an annuity, for example, that might not start paying an income until after your likely death or that doesn't leave you enough cash to pay ongoing bills.

Be wary if someone suggests replacing an existing policy with a new one. This generates additional commission for the agent but can cost you in taxes and penalties.

Surrender charges

Many annuity contracts penalize you if you take out money before a certain period. This can be more than 10 years. Ask about any surrender charges. While longer surrender periods can produce better benefits, some of the longest surrender schedules simply generate higher commissions for salespeople without benefiting you. Make sure you don't tie up money for longer than you want.

In Oregon, companies, as well as agents, are responsible to detect and stop unsuitable sales. For example, the company or agents must keep records of the research they do to determine whether a sale was appropriate. Records must be kept for three years after the sale.