What Are The Fees And Costs Of An Annuity And What Are The Risks Involved?

May 4, 2012 By

Do you want to know how the insurance companies are going to charge you if you bought an annuity? Do you want to get a better understanding of what kind of costs and fees were involved before you make any decision on whether or not to buy an annuity? Do you also want to know the risks involved in buying annuities? Then read on.

Since these are the questions that are often asked by those people who are interested in buying annuities, it would be better to break down the 3 different types of fees that go into annuities.

1) Mortality and Expense Fees. The primary fee normally charged by an annuity is what’s identified as a “mortality and expense.” It pays for the insurance guarantee, commission, selling, and and other expenses of the agreement. In a variable annuity, these fees will be billed as a portion of the average investment value and will most likely be quoted in the form of “basis points.” In a fixed annuity, these fees are generally integrated in the resolution of the periodic rate of interest or the annuity payment amount in the distribution phase from the insurance company.

2) Surrender Fees. The inclusion of surrender fees often hold back many in buying annuities. Many annuities will charge a surrender fee only if the annuity is cashed prior to the specific time period, which may run between 1 to 12 years. An average surrender fee starts at 7 percent in the 1st year of the contract, and is reduced by 1% per annum then until it gets to zero. When the annuity is surrendered, this fee will be made from the value of the annuity. Surrender fees’ main purpose is for insurance companies to make money, but it also serves to dissuade a short-term investment by the buyer.

3) Management Fees. On subaccounts, management fees are evaluated by variable annuities, and they’re similar to the manager’s fees in a mutual fund. Management fees change with respect to the different subaccount options in the annuity. The fees, generally, will be about under those charged by a managed mutual fund in the same investment group — but not at all times.

The Truth about Fixed Indexed Annuities

Video -  The Truth about Fixed Indexed Annuities. The truth about annuities.

The Risks Associated with Annuities

What happens if the insurance company breaks down and goes out of business? What is going to happen to your investment? There are a lot of safety means insurance companies do have in place with every type of annuities. However, like any other investment, there’s a risk involved. Some of the risks are: interest risk and fees risk. So before you make any investing decision make sure you consult a financial adviser and perform a risk assessment procedure.

Annuities In The News

Why Annuities are the Answer (But Such a Tough Sell) – TIME

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Why Annuities are the Answer (But Such a Tough Sell)TIMEWhen it comes to the one sure-fire solution—immediate fixed annuities—retirees have a split personality. According to research out of Harvard, 77% of retirees wish they had locked in a guarantee …

NPS subscribers to have six firms to buy annuities from – Business Standard

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Jagran PostNPS subscribers to have six firms to buy annuities fromBusiness StandardSubscribers to the New Pension System (NPS) would have a choice of six insurance companies from which they can buy annuity products after exiting the scheme. Annuity p …

Another Case for Annuities in 401(K) Plans? Cognitive Impairment – Insurance News Net (press release)

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Another Case for Annuities in 401(K) Plans? Cognitive ImpairmentInsurance News Net (press release)By Diana Britton The battle to get annuities into 401(k) plans has been hard-fought, and it’s not over yet. Insurance companies see a need to get ‘lifet …

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Drowning In Debt? Learn To Swim With These Three Steps

March 28, 2012 By

Quite a few people these days feel like they are simply drowning in debt.  They’re looking at their credit card statements each month and wondering what they’re gong to do to appease their creditors and gain a little bit of financial security and independence again.  The great news is that almost anyone can lessen their debt loads and take one more step towards solid financial ground again.  Not everyone can be a millionaire, but nearly everyone can boost their cash cushion.  Here are three steps to “help you swim when you’re drowning in a pool of debt.”

Since this swimming analogy may work as a gimmick for the article, let me first apologize to those who think it’s goofy, because it kind of is.  And two, please don’t take this as specific advice for people.  Everyone is different, and everyone should do their research and own investigating for the best path to take when paying off their debts.  Ready?  Great, let’s move along.

Swimming Lesson #1: Learn To Tread Water

The first step you’ve got to take is treading water, which in this case means not taking on any more debt.  It is easier said than done, but getting rid of the credit cards for a while and focusing on sound financial maneuvers is better than adding to the balance each month.

It is odd how many people figure that their monthly payment is, say… $100 each month.  And so they go and pay $200 figuring double payments are good, right?  Usually they are if they fit your general financial plan, but it’s not very productive if you’re adding $100 of charges to the card each month.  Instead of being out of debt twice as fast as you could be paying the minimums, you’re just setting yourself back.

Don’t add to debt as you’re actively trying to pay it off.  Stop spending on your credit cards or other lines of credit that allow you to draw against them.  Keep credit to help you buy a car at a more affordable rate, or a house, or a rainy day. 

Swimming Lesson #2: Technology Is Your Friend, Start to Doggie Paddle

If you’ve read any articles of mine, you’ll know that I’m a big proponent of making use of the different technological tools available.  Whether it be online banking to keep track of any potentially suspicious charges, or smart phone apps to track spending and take care of deposits, I’m all about it.  You need to be careful, of course, and be sure that you don’t leave passwords exposed, windows open and account numbers listed on the screen. 

As long as you are careful, then you can make use of obtaining your credit report online through a reputable source, accessing your banking information, and making sure that your payments are put onto a regular schedule that you can monitor in just a couple of moments out of each day.  If you fall behind on your checkbook’s register, you can often get access to your recent expenses online so you don’t overspend.  The list goes on and on.  Being able to track your finances so quickly and easily can be maddening for some people who obsess over such things, but once these folks get a little bit more balance to their approach, this easy access can be a wonderful thing.

As with all things, moderation when you’re using the technology based solutions is necessary, and ensuring that the steps you take are secure is necessary.

Swimming Lesson #3: You Have Got to Have a Plan, Swim Laps

In the first point, I mentioned briefly whether double payments fit into your general financial plan.  If you don’t have a financial plan, why don’t you?  Is it a cost prohibitive type of thing?  Do you not want to go to a professional to get your finances sorted out and have to show them what you make, what you spend, and what you owe?

A point that I’ve made several times from my own experiences is that unless I actually plan out a strategy of spending, saving and repaying, I’m bound for so so success and just as much stress as ever. 

However, if I do the hard work of tracking every expense, identifying the essentials like food, bills etc, then I can easily identify how much extra I can put towards saving and repaying debts.  Without getting this in order, it’s a a train wreck waiting to happen.

Get Out Of The Pool

What are your plans to get your head above water and get your finances in order?  Do you have your own plan that makes these three steps pointless and utter nonsense?  If you do, please share your secrets for the others who are struggling with getting out of debt.

 

I want to thank you for reading this article and introduce myself.  I’m Derek, and I do most of the research and writing at thedebtonator.org, where we gather and make commentary on what we hope are the most useful and interesting links to articles and other blogs about dealing with debt and personal finance issues in one location.

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Compare spread betting companies

March 21, 2012 By

When an individual starts to spread bet and researches Spread betting companies to help him or her decide which company is best to open an account with, we all know that tight spreads are key, but why are tight spreads so key and should they be the only thing that you consider when making this decision?

The main cost to financial spread bettors is the spread, the difference between the buy and the sell price, which is why the tighter the spread the better the investment. Therefore it goes without saying, the wider the spread the more costly the investment to you, the investor. Finding a company that offers you the tightest spreads allows you to recover your investment quicker, unfortunately the way the spread works you always start by making a loss and need to wait for prices to move outside the spread in order to move into gain. So if you compare spread betting companies, the spreads that they offer should be the first thing that you consider. You should try and pick a company that offers consistently low spreads, for example WorldSpreads is famous for offering zero spreads on some markets, WorldSpreads shares are now suspended, therefore showing the importance of going for a company that consistently offers lower spreads rather than one that offers spreads that are too good to be true as a marketing ploy.

Margin requirements are another important aspect to consider when doing a spread betting company comparison. Margin is the amount of cash you need in your trading account in order to make a trade. A low margin requirement means that you only need to deposit a small portion of the value before you can open a trade. As discussed, margin requirement and tight spreads are clearly not the only thing that you should be looking at when you compare spread betting companies. Remember that spread betting allows the trader to take a geared position so you can always lose more than your initial deposit. It is therefore important to consider how to minimise your risk by making the most of the various tools many spread betting companies make available to you. This is an important consideration when researching spread betting companies as many companies offer a vast array of education and learning tools to help their traders minimise risk – which you should be looking to take advantage of.  See below a selection of tools which you should consider when you are deciding which spread betting company to open an account with.

Services and tools that spread betting companies offer to minimise risk include; new account offers, 24 hour trading hours, automatic stop losses, guaranteed stop losses and trailing stops are other points that you should thinkabout when looking at spread betting brokers. Many spread betting companies also offer a wide selection of online modules which you must take advantage of. Nobody expects you to jump into spread betting without any helps so always open a FREE demo account. Demo accounts allow you to trade with virtual money and receive access to a variety of markets. Spread betting demo accounts allow you to familiarise yourself with the different trading platforms on offer without risking your own funds. Familiarising yourself with trading platforms is essential when you start to trade with a new spread betting firm as you will minimise the risk of making elementary mistakes which can be easily avoided. Finally, it is always advisable to stay “in the know” and attend some FREE seminars that the superior spread betting companies have on offer, if you can’t physically get to the seminars then try and attend some webinars that permit you to keep your trading knowledge up to date in the comfort of your own home or office

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How To Find The Best Mortgage For Your First Time Home

January 4, 2012 By

Being a buyer of a first time home can be a very difficult thing. For example, you want to buy that gorgeous piece of St George real estate and yet you do not know how to proceed from there.

You may be aware of various things such as getting a loan and such, but you may not be feeling confident about how and where exactly you will be getting a loan. Do not worry since this is very much normal.

In this article, you will get to know some of the things you can do in order for you to be able to find a good, decent deal on your first time mortgage loan.

• Check your own bank.

When searching for a good lender, you should try your own bank first. The longer you have been with that bank, the better it is for you since you will have more bargaining power.

Ask around and you will find that they will actually go out of their way to try and match your needs. Also, if you happen to find another better deal, you can inform them and they will probably make a better offer.

• Go around and look for good First Time Buyer Mortgages

A First Time Buyer Mortgage is quite special and can only be used once. Let lenders know that you are looking for this and you may receive great discounts and offers to convince you to transact with them.

• Make sure that you have a substantial deposit or down payment.

Deposit is a big thing. The bigger the down payment on the mortgage loan, the less you will be seen as a risk by banks. This is obviously a very good thing as it will increase the chances that they will give you a good loan.  If your credit is bad and you have no money at all for a down payment, the lender is going to know that you are a bad credit risk and most likely get behind on your mortgage payments.

With these tips, you are sure to be able to get a good loan to purchase one of those St George Utah homes for sale you have been wanting to buy.

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Things to Prepare You for Retirement

December 5, 2011 By

Everyone wants to know what they should be doing in order to go about planning for a successful retirement. There are plenty of things they can do. However, certain things are a priority. So, what are those things that you need to know about?

These are the things which one should be doing to prepare for retirement.

The thing is to have goals.  The other thing about this is that you want to start saving money and keep saving. When a person is looking at how much they need to save, one should know how much money they are going to need.

These are two of the things that need to be done. If one doesn’t know what their needs are then talking to a financial expert might be the best thing as they can help a person to learn about how much they are going to need.

Another thing that a person needs to do would be to take part in an employer’s savings plan, often a 401k. The thing with this though is that not many employers offer this any longer. Many have cut this out due to the hard times. They don’t have the money to pay out for extra things such as this. Some might have employers that have a pension plan. This can help a person save for retirement as well.

Sometimes, looking at investments can help a person save money. There are all sorts of things that are out there like annuities, or investing in structured settlements. One really needs to pay attention to the principles so they get the most back.

When one starts a retirement savings, they need to make sure that they don’t dip into it. There are all too many people who do this and then wonder what happens to the money as they don’t replace this. Some have gone so far as to put it in an individual retirement account or IRA.

Some people might have questions. It’s hard to know how much a person might need for them to retire and more. So, if there are any questions, one should ask them. There are a number of things that one can do to make sure that they are ready to retire.

Retirement is great, but it means that a person has to have the right funds before this can happen. If they aren’t aware of this and they don’t plan accordingly, then there could be money troubles. Some have ran into this and they were not able to retire as they were not financially set since they did not watch their money and more so. This is something that one can prevent from happening by planning ahead and making good decisions.

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