Annuity Companies: Choosing the Right One

By Compuquotes Team on January 12th, 2009


While searching for the correct annuity is imperative so you won't get stuck with a wrong annuity for life, it is equally important to research on annuity companies. You have to assess the financial stability of an annuity company so as to ensure that it will be able to deliver its promises to you. Fortunately, you don't have to pore over a company's financial papers to determine its financial strength. Several independent rating organizations have done the job for you. A.M Best Company, Fitch, Moody's Investor Services, and Standard and Poor Corporation are among the known organizations that offer rating services. The ratings have been drawn using rigorous criteria, and are a measure of insurance companies' financial strength. It goes without saying that higher-rated companies should be preferred over low-rated companies.

Although financial stability can be easily assessed, there are other, more subtle, qualities that should be looked for in annuity companies. Apart from financial strength, the quality of customer service is a measure of how the company values its clients. Is the company's 24-hour hotline working? Do customer service representatives readily answer calls and make an effort to answer your questions? If they can't answer your questions, do they immediately refer you to a higher officer who can? Is information regarding annuities and accounts easily available through telephone or on the Internet? These are necessary questions that have to be asked while assessing an annuity company. Most of these questions should be answered with a yes.

Another measure a provider's sincerity is the way they phrase their contract statements. As a general rule, contract statements should be easily read and understood. Additional charges may be concealed behind elaborately-worded statements. If the contract statement is difficult for you to understand, ask questions. Make sure that you understood all about how the annuity works, its benefits, and the charges you may have to incur before signing your annuity contract.

Although financial stability and a high-level of customer service are essential in an annuity company, these do not really ensure that your annuity performs well. Basically, the performance of your annuity still relies on the kind of annuity you were offered, the conditions inherent in the plan, and the level of growth your money is subjected to (is the interest rate fixed or variable?).

Your satisfaction as to the annuity that you purchased, although dependent on annuity companies, relies more on insurance agents. It is fundamentally the agents that explain to you how annuities work, who asks you questions on how long and how often you'd like to be paid and to offer suggestions if you get confused with the myriad of annuity plans available. Therefore, it is also important to make sure that you're working with a suitably objective agent. In worst cases, unscrupulous agents may even trick you out of your hard-earned savings. So try to determine whether the agent has been in business for long, whether he's knowledgeable regarding annuity plans, and whether he also works for a reputable company. If you're unsatisfied with an agent's service, there is nothing wrong with changing agents even if both belong to the same company.

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