Online Annuities

How (and How Not) To Buy An Income Annuity Online

person researching online annuities on laptop
Not all online annuity websites are created equal. Do your homework.

By Nimish Shukla, CFA

Now that it’s 2016, isn’t it time the annuity buying process felt more modern? You can easily buy mortgages, car insurance and many life insurance products online. So why not with immediate and deferred income annuities? The truth is it’s finally possible to buy online, but most of the websites that promise to do it actually don’t. Here’s how the technology and approach of Abaris makes us different from other companies.

Getting an annuity quote for yourself online has some obvious advantages: better pricing, more transparency, more flexibility and not getting pushed into a sale. That being said, the online annuity buying process isn’t always perfect. Frankly, it can be complicated.

The Reality

If you do a simple Google search, you’ll probably find a number of sites that purport to show you annuity quotes online if you fill in some information. The reality? Most don’t actually follow through on their promise. Here’s what they actually do.

Lead Gen

There’s one type of website that will take the phone number you provide and sell it to an insurance agent (sometimes two or three) who might call you and try to convince you to buy a product. They’ll often hassle you when you say you’re not interested. This is called “lead gen” or “lead generation.” It’s big business, but not in your best interests.

No Option Emails

There’s another type of website that collects your information and then promises to send you your quotes via email. Even if they follow through on the promise, you still don’t get the flexibility with these types of websites to change purchase sizes, deferral periods or different riders and see how it affects your payouts. This means you’ll probably have to endure multiple phone calls and email exchanges just to get basic information you probably could with an online platform. Also with these kinds of the sites, you can never be sure they’re showing you everything they have available.

The Remedy

Before you fill out that form, make sure the company is actually going to do what they say. A good way to find out? Pick up the phone and see if you can get a real human to answer questions like, “If I enter my information, will I be able to see quotes online in real time?” and “Will you give my information to any third-party who will contact me?” If the answers you get don’t add up, it’s probably best to look elsewhere.

The Seven Rules

Here are seven rules to find out if an income annuity like a single premium immediate annuity (SPIA), deferred income annuity (DIA) or qualified longevity annuity contract (QLAC) makes sense for you and how to get a good value on the product that fits your goals:

  1. Call the company before you provide personal information. Make sure you get a knowledgeable representative who can answer the questions listed above.
  2. Go with someone who has the credentials to actually provide you with advice about whether you should purchase. CFA, CFP or RICP are good credentials to look for. It’s important that you work with someone who can give you advice about whether an income annuity makes sense in light of the rest of your financial situation. Without these certifications, you’re probably just talking to a salesman.
  3. Make sure you understand what you’re buying. If it seems too complicated or too good to true, trust your instincts. You’re probably right.
  4. Technology matters, so go with a sophisticated firm. The more customized information an online annuity vendor puts in your hands, the better. If they don’t let you run quotes yourself or let you see how much different features cost in real-time, then they may not be any better than that offline insurance agent you’re trying to avoid.
  5. Check on how many carriers you’re seeing and what their credit ratings are. Both quantity and quality matter if you want to get a competitive quote. Try to see quotes from at least 4-5 providers. And it almost never makes sense to buy an income annuity from a provider with an A.M. Best Credit rating below A. A++ or A+ are even better.
  6. Don’t go with the site that purports to sell everything under the sun. You want to make sure you’re dealing with an income annuity expert. The products can be complicated and you need to make sure you’re dealing with someone who knows all the ins and outs.
  7. Ask for references. Like anything you buy, it’s always good to hear from someone who has gone through the process before. You can ask the company to put you in touch with one of their customers.

I hope you found this summary of the online annuity buying process helpful. If you have any questions, contact us by calling (888) 248-8995, using the chat feature or emailing [email protected]