Knowing what you are getting into is important in any financial transaction. When you are interested in buying a fixed annuity, the same advice applies. Before cutting a check for a fixed annuity, you should be directed by the sales agent to fill out a suitability assessment form. Almost always a part of the annuity paperwork, the assessment form helps your agent as well as the compliance department of the issuing insurance company determine if the recommended fixed annuity is appropriate for your needs.

While you do have to fill out an official suitability form, you should also perform a personal suitability assessment before you buy a fixed annuity. The first thing to consider is your age and health. If you are under age 70, are healthy, and foresee a number of years ahead of you, a fixed annuity may make sense. Those older than 70, in poor health or in need of immediate income should pay particular attention to the liquidity provisions of the fixed annuity under consideration.

A fixed annuity should be purchased in addition to other retirement savings; you shouldn’t put all your eggs in one basket, so to say. Fixed annuities are not usually liquid – if you end up needing the money that you used to purchase the annuity, you will likely pay surrender fees. Consumers who want to move their whole savings into a fixed annuity are generally considered unsuitable candidates for fixed annuities. Luckily, for those who are suitable, many fixed annuities allow you to withdrawal a certain percentage yearly, usually 10 percent.

If your income is so low that you are currently in a low tax bracket, you may have less to gain from a fixed annuity’s tax deferred status. In many cases, it would be better for you to keep the money liquid, in case of an emergency. And if you are replacing an underperforming annuity with another annuity via a 1035 exchange, the new annuity must earn you significantly more than the previous annuity. It’s not worth subjecting your funds to a new surrender fee schedule with a new contract if you won’t be earning a higher interest rate. Make sure that your new contract is a suitable exchange for the older annuity.

Assessing whether or not a fixed annuity is right for you is an important part of buying an annuity. Call the Annuity Specialists at AnnuityLibrary.com at 1-800-998-4056 so that they can help you determine if a fixed annuity is right for you.