Bonus Rates

Want to know the ONLY time to consider a Bonus rate in an Annuity Decision? Many products include attractive bonus interest rates.  Some annuities offer bonuses as high as 10% or more just for signing up.

Companies lose money on this from the start!

To pay for this expensive form of marketing, the insurance company will need to guarantee they can hang on to your money for long enough to recoup the cost and turn a profit. If you buy such a product, you are married to a serious surrender schedule with substantial fees.  Say goodbye to your money for a long time. Bonus rates are just a form of flashy packaging for annuity products and should definitely be ignored nearly every time an annuity is evaluated. When they make sense: Once all other contract provisions are equal, a bonus rate can break a tie between two annuities.   Then, and only then, is a bonus a deciding factor.  Regrettably, we have yet to see an annuity where all the other factors are equal. Action Items:

Bonus rates are carrots that pander to the base human emotion of greed.
Set aside greed and examine your true motivations – if you really don’t need liquidity, or don’t mind a long surrender charge, a bonus rate might be worthwhile
In general, avoid bonus rates until the end of a decision making process, once YOU lay out EXACTLY what you want your annuity to do for your financial future.
  

 

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