Wednesday, December 02, 2009

How to Buy an Annuity From a Bank

In recent years, banks have become more than just a place to house your checking and savings accounts. Most major banking institutions have installed in-house insurance and investment departments to assist their customers with other financial needs. Many large banks have created their own insurance companies to provide life insurance and annuities to customers, while others operate on a partnership basis with existing insurance companies. Once you have decided to invest in an annuity, your bank may be a convenient place to purchase one.

Step 1

Determine if an annuity is right for your retirement goals. Ask the investment professional at your local bank branch to help you understand the pros and cons of annuities, and whether or not the benefits are appropriate for your situation.

Step 2

Evaluate the different annuity products available from your bank. Fixed annuities are safer and offer a guaranteed interest rate, but lack the ability to participate in significant market increases. Variable annuities are riskier, but have the chance to earn sizable increases if the sub-account choices inside it perform well.

Step 3

Determine how much money you are comfortable contributing to an annuity. Consider the fact that annuities have surrender charges that may be quite severe and last for many years.

Step 4

Complete the annuity application paperwork. Ask the investment professional at your bank branch to help you fill out the forms required for purchasing the annuity of your choice.

Step 5

Arrange for the transfer of funds into your new annuity. Most deposits can be made by check or wire transfer from your existing checking or savings account. If the money you plan to deposit is in an account at the same banking institution, the process may be streamlined and require less effort on your part.

Step 6

Examine your annuity contract when it arrives. Read the entire package to ensure that the provisions of your annuity are exactly what you believe they should be.

Step 7

Place your annuity contract in a safe place, and make sure your heirs know about the annuity and have access to it in the event of your untimely death.


You do not have to be a current bank customer to purchase an annuity. Feel free to visit several different banks to discuss the annuity options offered by those institutions.

All annuity purchases have a “free look” period during which you can review the details of your official contract and, if necessary, return it for a full and complete refund of your initial deposit.


Be wary of long surrender periods. If you ever change your mind and wish to cancel your contract you will be charged a penalty fee that could dramatically reduce the amount you actually receive.

Past performance is not a guarantee of future results. If you purchase a variable annuity, make sure you are completely informed about the past performance history of the sub-accounts, as well as the future market outlook for those particular investment choices.

Annuities purchased from banks are not FDIC insured. Instead, the safety of your principal comes from the claims-paying ability of the insurance company issuing the product.

References Fixed Annuity Guide Variable Annuity Guide

Resources (Further Reading)

The Red Carpet Broadcast: Things to Consider Before Buying an Annuity Annuities Variable Annuities, What You Should Know

Article originally published on eHow Money (12/02/2009)

1 comment :

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