Annuities, What Seniors Need to Know

2 What Seniors Need to Know If you are a senior, someone may offer to sell you an annuity. Annuities are complex. There are many kinds of annuities. And sometimes companies and agents take advantage of seniors. This booklet can help you ask questions and protect yourself, so you can make an informed decision that is right for you. Before you buy an annuity, make sure you • Understand what an annuity is. • Protect yourself, so you are not pushed into buying an annuity. • Decide if an annuity is right for you. If you have doubts or questions, contact the California Department of Insurance. What is an annuity? An annuity is a contract between you and an insurance company. You buy the annuity by making one or more premium payments to the insurance company. The insurance company makes income payments to you, for life or for a limited time. Annuities usually have commissions and other fees that cut into your investment. They typically earn less money than stocks and bonds. Most people who buy an annuity do so to get an income when they retire. An annuity is a long-term investment. Make the decision carefully. Do not be pushed into buying an annuity. • An agent should not push you to buy an annuity. That’s illegal. • AARP, the senior group, warns: Do not get a reverse mortgage so you can buy an annuity. You will pay too much in fees and extra charges if you do this. • The law says that anyone who offers to sell you an annuity must give you honest and accurate information on the terms and rules of the annuity, and its costs and benefits. • If you feel pressured, call the California Department of Insurance.