April 08, 2014

Missouri Department of Insurance offers annuity resources

Annuities can provide steady income after retirement

Jefferson City, Mo. - The Missouri Department of Insurance recommends that all Missourians review their retirement income strategies during National Retirement Planning Week, April 7-11. The department offers free, online resources that can help consumers better understand if annuities might be beneficial additions to their retirement plans.

Annuities are investment products sold by insurance companies. Consumers buy annuities to generate income or interest on their savings. A consumer pays a lump sum or makes periodic payments to the insurance company. In exchange, the annuity provides periodic payments to the consumer.

"As consumers plan for their retirement, they may want to consider annuities as a way to safeguard their financial future," said John M. Huff, director of the department. "While annuities can be beneficial, they also can be confusing, and not suitable for everyone. Consumers are encouraged to visit our website and work with a trusted insurance producer for more information." 


There are several types of annuities available with varying levels of risk and guarantees. It is important to understand the different types and benefits offered before you select one.

  • Single premium annuity: You pay the insurance company once.
  • Multiple premium annuity: You pay the insurance company multiple payments.
  • Immediate annuity: You receive income payments within one year of paying the premium.
  • Deferred annuity: After the initial savings phase, you receive income payments once you choose to receive them.
  • Fixed annuity: Your money, minus any applicable charges, earns interest at rates specified in your contract.
  • Variable annuity: The insurance company invests your money, minus applicable charges, in a separate account based on the amount of risk you want to take. The money can be invested in stocks, bonds or other investments.
  • Equity-indexed annuity: This variation of a fixed annuity bases the interest rate on an outside index, such as a stock market index. The annuity pays a base return, but it may be higher if the index increases.

Consumers should contact a licensed agent or broker to make sure an annuity is the right fit for their retirement package. As with other major purchases, consumers should shop several insurance companies. Don't get pressured into buying an annuity.

If you are dissatisfied with an annuity once you receive it, Missouri law allows a "free-look" period. Once you receive the policy or contract, you have 10 days to cancel it and get a full refund of premium payments. 

Consumers can get more information about annuities by calling 800-726-7390, or visiting the department's annuities FAQ page.

The National Association of Insurance Commissioners' Insure U also has retirement resources for consumers, including baby boomers facing the challenges of caring for aging parents while paying college expenses for their children. Insure U also has insurance resources for seniors nearing retirement. The NAIC offers free consumer guides on annuities.