Why Good Annuity Advice is Hard to Find

Annuities are commonly sold by insurance companies as a solution for retirement. Unlike stocks and bonds, they provide guaranteed income for as long as you live – at least to the extent supported by California’s Life & Health Insurance Guarantee Association.

But getting help with choosing annuities can be surprisingly difficult. Here’s why.

The first thing to understand is that an annuity is a contract between you and an insurance company. You give them money up front and they promise you a stream of income over your (and possibly your spouse’s) remaining lifetime.

For the simplest types of annuities, like single premium immediate annuities (SPIA), the documentation is fairly straightforward. But for more complex types, such as equity indexed annuities (EIA) and guaranteed minimum withdrawal benefit (GMWB) annuities, the contract can run to 20 or 30 pages, and the details of the various calculations and limitations, which can have a significant impact on your actual withdrawal or income benefits, are often obscured among lots of legal jargon. (read more)