Annuities, What Seniors Need to Know

5 Watch out for fixed annuities with a minimum guaranteed interest rate of 0%. You will not lose principal, but your money will not grow. Also, you will not get all the extra interest that the stock market might earn. The insurance company decides how much you get. Watch out for ads that show high interest rates. If the interest rate is not guaranteed, you cannot count on it. • Some annuities offer a higher guaranteed interest for the first year only. This is called a teaser rate. The interest goes down after that. • Make sure to ask what the minimum rate is and how long the high interest rate lasts. There are different ways to start getting income payments. Immediate Annuity: You start getting income payments within a year after you buy the annuity. You usually cannot take any extra money out. The main reason to buy an immediate annuity is to get a regular income right away in your retirement. Deferred Annuity: You start getting income many years later, when you retire. The main reason to buy a deferred annuity is to have your money grow tax-deferred for a while. Learn more on the next page. Do you want more tips on protecting yourself? Watch the video on the Department of Insurance website. Go to the Senior Information Center at www.insurance.ca.gov. Or order your own DVD of the video by calling 1-800-927-4357.