No. of Recommendations: 0
I agree with the other posters that you can do better elsewhere. Here are a few questions to ask the salesman (if he won't answer them you should be able to find the answers in the prospectus; if he didn't give you a prospectus he is truly not being up-front with you):
- What are the TOTAL expenses associated with this investment? (Anything over about .4 % and you can do a lot better; with Vanguard - although you may not have enough yet for them - you can go as low as .18%.)
- What is the M&E (mortality and expense)fee? (This fee is unique to annuities and ANY non-annuity IRA will not have it. The only thing that paying this fee will do is give your heir the higher of a. your total deposits into the annuity or b. the investment value of the annuity if you should die. This is very low risk for the insurance company but very expensive for you.)
- If I decide to transfer my money to another IRA in the future, is there any cost for doing so? (Many annuities have exit fees if you withdraw your money - even for deposit in another qualified account. For example, with many annuities, if you move the money to another annuity or to an IRA in the first year, they will keep 5% of your money; 4% in the second year; 3% in the third year. With some companies, the clock restarts every time you add money to the account, so you are always 5 years away from reaching the point where there is no fee. Some annuities even use 7 years/7%.)

I think the answers you get to these questions will tell you a lot about annuities and the person you are dealing with.

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