Read this before purchasing an annuity.

Purchasing an annuity is a major financial commitment. When you sign the contract it is almost like buying a house. Be sure to understand what you are getting into before you sign. As long as you understand the details and the annuity is a good fit it can be one of the best decisions you could have possibly made! I am definitely pro annuities! Just be sure to understand what you are getting.

When learning how to purchase an annuity there are certain details to keep in mind. Be certain to:

1. Understand the surrender charges. Surrender charges can extend for as long as 15 years in some cases and can be very expensive. Purchase an annuity that matches your schedule so that money will be free when you need it.

2. Know your time horizon for investing. When do you need money out of the annuity? How much will you need? Annuities that you purchase are meant for long term investing.

3. Check the insurance companies rating before purchasing an annuity. If a higher rated insurance company is offering an annuity that is basically the same then choose the company with the highest rating.

4. Understand why you are purchasing an annuity. Is it for safety? Is it for income? Is it for growth? Is it for security? Is it for tax deferral? Is it for a guaranteed income stream? Is it for other guarantees? And does it really fit into your investment plan? Are you using the annuity in place of fixed income investments or as a growth investment?

5. Understand the differences between a fixed and variable annuity. A fixed annuity cannot go down in value. A variable annuity can go down with the stock market. They can both have certain guarantees so be sure to understand what you are getting. Can it go down in value? Why do you need to purchase an annuity that can lose value?

6. Learn about how this annuity is going to affect your taxes when you take money out. Annuities are taxed a little differently than other investments. Is your annuity in an IRA? How does that affect your taxes? Also, if you are passing this annuity down to heirs then why are you purchasing an annuity?

If you are purchasing a variable annuity:

1. Why are you purchasing a variable annuity that can go down in value? If it is for the past performance you should know that the sub accounts/investment options rarely ever perform the same two years in a row. You need to have a reason to purchase an annuity. Be sure it is right for you.

2. Also before you purchase an annuity be sure that you can afford to have your investment down when you need the money. If not then do not purchase variable annuities. If you had to take money out when your investments were down, it would be much more difficult to recover from your losses.

For purchasing a fixed annuity:

1. Check the surrender charges once again. Usually they are higher and longer on fixed annuities than any other kind of annuity. Think long term commitment. Study the schedule to be sure that when you need money it will be available with no charges.

2. Fixed annuities have amazing guarantee options. If you want one of these guarantees be sure to understand it entirely. What happens when you take money out? Look for the penalties not the process of taking money out. You can also compare options with other companies. There are so many now, some other insurance company could have a better option to fit your situation.

One last absolutely vital thing to check is the dollar amount of your states guarantees. Run a Google search for (your state) insurance guarantee. This is how I found my state’s guarantee. Do not go over that amount with a single insurance company ever.

When you purchase an annuity be certain to get all of these questions answered. Most importantly, do not be rushed or pushed into making any decisions. There is no reason to rush through the decision making process with such a long term commitment like purchasing an annuity.

For step by step information on how to purchase an annuity visitKeith’s Annuity Help Now website or request his 7 Free Retirement Annuity Tutorials that show how to set up your retirement accounts to never go down again while filling up your bank accounts with the cash you need for your retirement.