Annuity guide
10 questions to ask before you buy an annuity
An annuity is a long commitment, so it's worth asking hard questions first. Ask these of any agent, including me, and get the answers in writing.
By Dan Huslin, licensed insurance agent · Updated November 2026
1. Which kind is this, and what job is it meant to do?
Fixed-rate, fixed index and income annuities do different things. You should be able to say in one sentence why this one fits you.
2. How long is the surrender period, and what are the charges each year?
Ask for the schedule, and how much you can withdraw free each year. Commonly it's about 10%.
3. What is the rate, and how long is it guaranteed?
For an index annuity, ask about the cap, participation rate or spread, and whether the insurer can change them after the first year.
4. What does any rider cost, and what exactly does it guarantee?
Ask about the annual fee, how the income benefit base grows, and what happens if you withdraw more than the rider allows. See income annuities for how riders compare.
5. How financially strong is the insurance company?
Your guarantees are only as good as the company behind them. Check its ratings from agencies such as AM Best and S&P, and ask how your state's guaranty association limit applies.
6. How will withdrawals be taxed?
Gains are taxed as ordinary income, and withdrawals before age 59½ may carry a 10% IRS penalty. If the annuity is in an IRA, required minimum distributions apply. See retirement taxes and RMDs.
7. What happens to my beneficiaries if I die?
Ask about the death benefit, and with an income annuity, what each payout option leaves behind.
8. How are you paid on this product?
You're entitled to a straight answer. On the fixed and fixed index annuities I offer, the commission comes from the insurance company and isn't deducted from your money. Ask every agent the same question.
9. What if I need the money sooner than planned?
Ask about waivers for nursing home care or terminal illness, and make sure your emergency savings sit outside the annuity.
10. What are the alternatives, and why is this the better fit?
CDs, bonds, or leaving the money where it is can all be right. See annuities vs. bonds and CDs. A good recommendation includes what you'd be giving up.
Want to go through these together for your own savings? Book a free review or call 619-251-3868.