Does Your Annuity Bonus Make Up For Transfer Fees

Bonus annuities and recovering fees is a complicated question. The short answer is maybe. The long answer includes many variables.

In theory, a bonus is a replacement if the annuity bonus is more than the cost to sell other investments and move the money into the annuity. The annuity is not specifically designed to recover lost money because of selling investment for transfers. It is hair splitting on words but stick with me for a minute. I believe it is important to be specific.

The bonus pays a bonus for money invested even if there were no surrender charges or fees incurred with the money being invested. That being the case, the annuity must be examined without regard to the fact that the extra money could be making up for fees incurred. Why? An insurance company will not give you money for free.

How is the bonus helping the insurance company and how are they recouping the bonus money deposited into your account? Believe it, they are recouping their money. How?

Mainly it is through higher fees in the form or higher internal fees or lower caps and interest rates. Comparatively, a bonus annuity and a non-bonus annuity basically perform the same over long time periods. The longer the time period the more equal they are. The bonus annuity has its sweet spot though which is evident in the proposals you can get from your insurance agent. Just ask them to run 10 and 15 year proposals for the bonus annuity and the non-bonus annuity. Make certain they are based on the same interest rate.

To learn more about bonus annuities and recovering surrender charges read - Do Bonus Annuities Make Up For Surrender Charge Transfer Fees?

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