Can I Buy an Annuity Online or Without an Agent?

The internet has become the primary channel for consumers to obtain goods and services over the past twenty years, with the population as a whole becoming increasingly comfortable shopping online. You can now just as easily buy a car or your groceries via the internet as you can a bestselling book. 

The convenience of e-commerce is what draws many of us in, allowing for a seemingly endless selection of goods while saving valuable time and money. The internet has even developed into the channel of choice for purchasing financial products, including stocks, bonds, and life insurance. And there has been growing demand by investors to buy annuities online. 


And it’s no wonder that consumers look online for income planning products like annuities. Most savvy investors are well aware of their benefits, but many advisors fail to include them as a significant aspect of financial and retirement plans. According to one survey, 72 percent of advisors did not mention annuities with lifetime income as a strategy for retirement planning, showcasing not only why an investor may turn to their own online research for guidance, but also why individuals must find a trusted financial advisor that specializes in wealth concepts beyond stocks and bonds.

However, one thing that we’ve learned about the convenience of shopping online is that just because you can buy it online, doesn’t mean that you should. The more significant the purchase, the more difficult it is to guarantee you are making the right choice with your hard earned money. If you consider the complexity of a financial solution like an annuity, the question to consider is not, “Can I buy an annuity online without an agent?” but whether or not you should buy online as the most appropriate avenue for purchase. Let’s explore the many things a wise investor should first consider.


Can I Successfully Buy an Annuity Online or Without an Agent?

While you may see ads for online brokerage accounts, you’re less likely to find annuities advertised online. Annuities have not yet become commoditized in the way that brokerage accounts have, so there will be more work in finding a product that meets your needs without the guidance of a qualified insurance advisor. 

So, yes, you can buy annuities online without the help of an insurance agent, but you’ll have to spend a significant amount of time on research. And, there are only two channels for direct annuity sales online:

• Life insurance companies: Life insurances companies selling direct-to-consumer, which include the many household name insurers, will be among the top results in your search, but not all of them sell directly online. You may find a familiar name, click on a link and maneuver your way through a complicated online form only to land on a page that still requires you to speak to an agent in order to make your purchase. This is not only frustrating, it is misleading.
• Online marketplaces: Online marketplaces that sell investment products, including annuities, will also be among your search results. But how do you choose from these providers? Are they legitimate? Will you still have to speak to an agent? Do they have the breadth of products to meet your particular needs? There are many questions to be asked before investing with these sometimes unknown sources—and you may find that answers are hard to come by.

Trust is a crucial element when selecting a financial provider. What started out as a search to purchase an annuity online can easily turn into a mission to ensure that you can trust the provider. If you find yourself searching the Better Business Bureau website for complaints, perhaps you should trust your instincts and reconsider whether a licensed and well-respected financial advisor that you can build a relationship with is the most reliable means to secure your retirement, as opposed to trying to tackle the job on your own.


How to Buy the Right Annuity (and Why Having an Advisor Matters)

As with any financial or retirement product, you must take the time to fully understand what it is that you are buying. A survey by the Insured Retirement Institute found that 75% of investors claimed to be familiar with annuities, but only 46% knew that annuities can provide lifetime income.

 Annuities are designed to meet your long-term needs for retirement income and to help ensure that you don’t outlive your savings. There are two types of annuities: variable and fixed. Variable annuities place your investment in stocks and bonds, making them subject to market volatility. This means that your account could be worth more or less than your initial investment when you retire. Variable annuities require special securities licenses and put your principal at risk. They also have high fees. Fixed annuities, in contrast, can offer a guaranteed rate of return and are best when seeking a fixed or increasing income at retirement without the risk of market loss. Besides variable and fixed annuities, there are also subcategories of annuities that can add up to hundreds of options that may or may not be appropriate for you, your long-term goals, and your particular financial situation. 
 
As you can clearly see, annuities are among the more complex financial products that you can purchase; the do-it-yourself route is definitely not recommended. The stakes are just too high! While you certainly can purchase an annuity online, choosing to do so will limit you to very few choices. Whatever time or upfront cost you believe to be saving in the short-term may end up costing you your financial security in retirement. Having a trusted advisor that can match you with an annuity based on your specific financial picture is essential. It is the only reliable option to help you navigate through the myriad of annuity choices on the market. 

The annuity and insurance advisors at Howard Kaye Insurance work with more than 50 highly-rated and trusted insurance carriers. Helping you meet your retirement goal with individualized attention is our primary objective. Call us at 800-DIE-RICH or reach out online. We can work with you to create a plan that ensures you don’t outlive your retirement savings.

source: howardkayeinsurance.com

New annuity code to help pensioners

A new code of conduct to help people who buy an annuity shop around for the best deal comes into force on 1 March. We look at what this means for retirees.
 
When you reach retirement age, it is highly likely that you will use your pension pot to buy an annuity.

An annuity is the investment vehicle which converts your funds into an income guaranteed for the rest of your life.

As this is a once-in-a-lifetime decision, it's very important that you get it right.

The good news is, under a new code of conduct, it should get easier to get an annuity with the best rates and most suitable terms for your particular needs.

What's the new code all about?

The new code, which has been drawn up by the Association of British Insurers (ABI), is designed to encourage people to shop around for their retirement income.

At present, many people simply sign up to the annuity offered by their existing pension provider without seeing what other rates are available elsewhere.

But firms must now make it clear to pension savers that they have the option to shop around, using what is known as the "open market option".

What does this mean for consumers?
Shopping around for the best possible rates is particularly important right now because annuity rates are falling.

In fact, figures from retirement income specialist MGM Advantage suggest average rates have plummeted by 20 per cent in the last four years.

"The ABI's code brings some enormous benefits to the 400,000 people who buy an annuity every year," says Richard Baddon, insurance partner at Deloitte.

"Rates can vary between providers by up to 20 per cent, and as consumers can buy an annuity only once, it is crucial they get it right."

What else is in the code?

As well as reminding people they should shop around, the code states that insurers will also have to publish their rates.

This should give consumers more insight into the market, and make it easier for them to spot an uncompetitive deal.

Providers will no longer be allowed to include annuity application forms in the information packs they send out shortly before retirement.

This should encourage people to shop around.

What about enhanced annuities?

In addition, the code will also force insurers to inform consumers about enhanced annuity options.

Enhanced rates apply to individuals who have a health condition that could affect their life expectancy.

These health conditions range from being overweight, or smoking, right up to serious illnesses.

Enhanced annuities pay out more, in some cases up to 50 per cent more, because the annuity provider is essentially calculating that you will not live as long as healthier individuals.

"By shopping around, getting advice, and making sure they disclose any medical conditions, consumers can secure the highest rates," says John Wilkinson from Nationwide.

"They can also shape their own annuity to include spouse benefits or guarantees, making the most of their pension pots in retirement."

Does the code go far enough?

While pension experts have welcomed the move, they say there is still some way to go.

"The code is a big step forward, but there is more to be done," says Tom McPhail from financial adviser Hargreaves Lansdown.

He points out that the code does not cover all pensions, in particular many workplace and auto-enrolment schemes.

"Ultimately we want a system where every consumer is able to shop around for the best possible retirement income solution, with access to the right information and advice, and to do so without any unnecessary delays or costs."

Richard Williams from The Annuity Bureau adds that there is still a lot of work to be done in educating consumers.

"This is needed to ensure people are fully aware of the options available, and to persuade consumers that the time they spend during the annuity purchase process will be time well spent," he says.

Plan carefully for retirement

In the meantime, it is vital that those approaching retirement age plan their choices properly to make the most of pensions savings and other assets.

If in doubt, seek professional advice from an annuity adviser or broker. You can also visit the Confused.com annuities comparison service.

source: confused.com

Is 2013 the worst time in history to retire?

Retirees taking an annuity at today's prices face some of the worst rates ever. So if you are about to take your pension, is there any way to escape the downward annuity-rate spiral?

Is now the worst time ever to retire?











This rather drastic description may apply, to some extent at least, if you are among the thousands of people who have to buy an annuity this year.

Annuities are the insurance products used to turn someone’s pension savings into a guaranteed monthly income for the rest of their life.

Rock Bottom

But a combination of economic and political factors has resulted in annuity rates falling to record low levels.

Matthew Renier, director of retirement specialist Retire Right, says: "Taking an annuity at today's prices is one of the worst times in history to have to do so."

The payouts on annuities are linked to interest rates and yields on government bonds, or gilts.

The company which sells you an annuity will take your pension money and invest it in order to pay you the income you have been guaranteed.

But if it can't get a very good rate of return on its investment, this will be reflected in the rate you are offered.

No end in Sight

But since the credit crunch, interest rates and gilt yields in the UK and around the world have slumped.

No recovery is expected for a few years at least.

Renier adds: "Low interest rates have forced annuity rates down for a number of years now, and they fell by around 10 per cent in the last three months of 2012 alone.

"And while there was a slight increase in January, low annuity rates are here to stay."

So if you are about to take your pension, is there any way for you to escape the downward annuity-rate spiral?

Here are your options:

Keep Working and Save More

If you are due to retire and take your pension in the next few months, there is always the option of carrying on working and trying to build up a larger fund.

This means you wouldn’t have to buy an annuity now, and it would mean you'll probably have more money when you do so.

Also, the older you are when you buy an annuity, the better rate you'll get, as the seller will expect to have to make payments for a shorter period of time.

There are downsides, however. Firstly, you may not want to carry on working.


And while employers can no longer force staff to leave because of their age, you can be forcibly retired if your age means you can no longer carry out your duties.

Secondly, there is no guarantee that annuity rates will be any better in a year or two's time.

And your pension fund could also drop in value during this period if stock markets perform badly.

Go for the drawdown option

If you have a decent amount of pension saved up, you could consider income drawdown.

This involves leaving your pension invested in shares and other assets in the hope that they continue to grow, while taking a regular income from it.

But this approach has its risks. Again, stock-market volatility could lead to falls in the size of your holding.

And unlike an annuity, your income is in no way guaranteed.

Drawdown is not something that should be entered into lightly.

If your pension is all you have to fund your retirement, and if it is not particularly large, there is a chance that drawdown will not be the right option for you.

Bite the bullet and buy now

Annuity rates might be bad at the moment, but they could be even worse in a year or two's time.

If you delay your purchase, you risk getting an even worse return when you do come to buy.

And you will have missed out on the annuity income you would have received in the interim.

But there are a number of ways you can boost your annuity income, whenever you decide to buy.

One of the simplest is to shop around before you buy.

You can get an annuity from any company, not just the firm which runs your pension, and rates can vary significantly.

Also look at the type of annuity you buy.

If you have any health problems, let the seller know as this could entitle you to a higher-rate enhanced annuity based on lower life expectancy.

source: confused.com