Be prepared, the Securities Exchange Commission (SEC) warns investors, “to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity is right for you.“ Investor education is the key to making informed investment decisions, but what questions should be asked? Investors must rely on their advisors because the variable annuity prospectus, frequently 100-plus pages, or more, is convoluted and not easily understood by the Average investor. The SEC recently issued an Investor Tip: Variable Annuities, What You Should Know publication to provide direction for investors.
Variable annuity contracts are considered by many investors complex which leads to their reliance upon the financial advisor who recommends the investment. The terms of the contract which investors should be familiar include: