HARRISBURG, Pa., Sept. 21, 2016 /PRNewswire-USNewswire/ -- Insurance Commissioner Teresa Miller provides important consumer information on annuities, to help people, especially seniors, protect their retirement income on today's edition of the Pennsylvania Cable Network program "Focus on Aging Adults". The one hour show airs on PCN tonight at 8 p.m., tomorrow at 5:30 a.m., and Friday at 9:00 a.m. Viewers can also watch the program after it airs through PCN's Select app and VOD/ Streaming service. More info on that can be found here http://www.pcnselect.com/.
"An annuity is a contract between you and an insurance company, which provides for periodic payments while you are living. Annuities are designed as long term investments to provide income over a period of years, and people often buy annuities to help manage their income in retirement," Commissioner Miller says. "Annuities should not be purchased to reach short term financial goals."
Appearing on the show with Commissioner Miller are AARP volunteer Mary Bach, who conducts seminars on avoiding pressure tactics and scams when people are considering annuities, and Insurance Department Consumer Liaison David Buono, who conducts consumer outreach and education on various issues.
Commissioner Miller notes the Insurance Department earlier this month released a new consumer guide on annuities, titled "The Do's and Don'ts of Annuities." This practical guide offers important information on what to watch out for when considering purchasing an annuity.
"Among the most important items consumers should understand when they purchase an annuity is their money is typically 'locked up' for a specified time period, often five to ten years," Commissioner Miller says. "If consumers want to withdraw above a specified amount of their money during this time, they will pay a penalty, called a 'surrender charge.' These surrender charges usually diminish the longer the money is in the annuity, until the product's full term is reached."
Commissioner Miller urges consumers to ask about the surrender charges, and before buying an annuity, decide whether they can afford to keep the money in the annuity for the entire surrender charge period.
While annuities are designed as long term investments, there are immediate annuities, with payments beginning immediately on purchase, for someone who needs immediate income. Withdrawal above a certain amount of the investment may still be subject to surrender charges. Deferred annuities have payments beginning at a future date, often at retirement.
Because annuities are often used to provide retirement income, and marketed to seniors, consumers should be careful when buying these, and take advantage of the mandated free look period. The free look period is time consumers have, after buying an annuity, to review and understand the terms of the contract. During this time, consumers can decide to cancel the contract and get all their money back. Consumers should make sure they know deadline for the free look period when buying an annuity.
AARP volunteer Mary Bach urges consumers to avoid being pressured into buying anything on the spot, fall for other high pressure sales tactics, or feel obligated to buy because they got a free lunch, dinner, or other gift. She also said consumers should always verify the policy terms in writing, only work with an agent who provides his or her credentials, and only make a check out to the company issuing the annuity, not the agent.
"Annuities can help provide income over a long period of time, and can be part of a retirement income plan. But, consumers, especially seniors who will be depending on this income stream, should consult trusted family members or financial advisers, and get answers to all their questions, before making any purchases," Commissioner Miller says.
The "Do's and Don'ts of Annuities" and other consumer information on these products is available on the Insurance Department website, www.insurance.pa.gov, by clicking on "Seniors" under Insurance Coverage Resources.
The Insurance Department's Consumer Services Bureau can also answer questions. They are available on the website, under Top Pages, by clicking on "Consumer Services & Protection", or by calling 1-877-881-6388.
MEDIA CONTACT: Ron Ruman, 717-787-3289
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SOURCE Pennsylvania Department of Insurance