1. What specific job would this annuity do?

Begin with the need, not the product name. Are you looking for a future income stream, protection from market losses, tax-deferred accumulation, a place for money you will not need soon, or a benefit for a beneficiary? An annuity may address some of those goals, but it should be evaluated alongside your emergency savings, other income sources, time horizon, health needs, and access to cash. If the purpose cannot be explained in one clear sentence, more discussion is needed before money moves.

2. What type of annuity is it—and when could payments begin?

An immediate annuity generally begins income payments soon after purchase, while a deferred annuity has an accumulation period before income begins. Fixed annuities credit interest under contract guarantees set by the insurer. Fixed indexed annuities credit interest in part according to an external index, subject to the contract's formula and limits; they are not the same as owning the stocks in that index. Variable and registered index-linked annuities have different investment risks and securities rules. Ask for the exact product type in writing and understand how its value can rise or fall.

3. Which values and benefits are guaranteed?

Separate guaranteed values from illustrated or current values. Ask which interest rate, income amount, withdrawal benefit, death benefit, or account value is contractually guaranteed and which can change. Annuity guarantees are obligations of the issuing insurance company and depend on its claims-paying ability. Review the insurer's financial information and remember that an annuity is an insurance contract—not a bank deposit.

4. How long is the surrender period, and how much can you access?

Many deferred annuities apply surrender charges when more than the contract's permitted amount is withdrawn during the early years. A withdrawal may also trigger a market value or interim value adjustment, reduce future income or death benefits, create taxable income, or end the contract if the full cash surrender value is taken. Write down the surrender schedule, any penalty-free withdrawal provision, exceptions for qualifying events, and the amount you could actually receive today—not only the account value shown on an illustration.

5. How is interest credited, and what can the insurer change?

For a fixed annuity, ask how long the current rate is guaranteed and what minimum rate applies afterward. For a fixed indexed annuity, review the index, crediting method, participation rate, cap, spread, and reset period. These features can limit credited interest even when the index rises, and the contract may allow some terms to change at renewal. Request a simple example showing a positive index year, a flat year, and a negative year so you can see how the formula affects your contract value.

6. What are the costs, riders, and income choices?

Some annuity costs appear as direct fees; others are reflected in credited rates, caps, participation rates, or contract benefits. Optional income or death-benefit riders may add a charge. Ask for every fee and adjustment in dollars and percentages, then confirm which features are optional. Also compare annuitization, systematic withdrawals, and any guaranteed lifetime withdrawal benefit. These choices are not interchangeable, and starting an income option can limit future access or changes.

7. What would you gain—and give up—by moving existing money?

An exchange or replacement can start a new surrender period and may cause you to lose an older contract's guarantees, income base, death benefit, or favorable terms. Compare the current and proposed contracts side by side: surrender value, guaranteed values, interest terms, fees, riders, income options, beneficiary provisions, and the time needed to recover any cost. Tax treatment depends on the source of the money, the type of contract, how funds move, and how withdrawals are taken. Consult a qualified tax professional before acting on tax consequences or rollover and exchange rules.

Your before-you-sign checklist

Keep the contract, disclosure, illustration, surrender schedule, rider pages, replacement forms, and insurer contact information together. Read the free-look or right-to-examine provision that applies to your contract and state, and use that time promptly if something does not match what you understood. April serves clients in Tennessee, Alabama, Indiana, Ohio, North Carolina, South Carolina, and Maryland; contract availability and state requirements vary, so your review should reflect where you live and the exact policy being offered.

Authoritative sources

Rules and figures were reviewed October 15, 2026.

Educational information only

This article provides general educational information and is not legal, tax, investment, securities, retirement-planning, or product-specific advice. Annuity terms, guarantees, crediting methods, riders, costs, surrender provisions, tax treatment, insurer requirements, and availability vary by contract, company, state, and individual circumstances. Guarantees depend on the claims-paying ability of the issuing insurer. Review the complete contract and consult appropriately licensed financial, tax, and legal professionals before making a decision.