5 Things Florida Annuity Buyers Should Know

Florida is one of America's most popular retirement destinations — and for many retirees, protecting savings and creating dependable retirement income become increasingly important as they transition from accumulating money to using it.

Annuities can play a role in that transition. But choosing an annuity isn't simply about comparing rates or looking for the highest potential income.

The contract matters. The insurance company matters. Your financial situation matters. And in Florida, there are specific consumer protections you should understand before making a decision.

1. Florida Requires Annuity Recommendations to Be in Your Best Interest

This is an important place to start.

Under Florida law, when an insurance agent recommends an annuity, the agent must act in the best interest of the consumer and cannot put the agent's or insurance company's financial interest ahead of the consumer's interest.

But what does that actually mean? It means an annuity recommendation shouldn't happen in a vacuum.

Florida's statute identifies a detailed set of consumer information that can be relevant when determining whether an annuity recommendation addresses someone's needs and objectives. That includes things such as:

• Your age
• Annual income
• Financial situation and obligations
• Financial experience
• Insurance needs
• Financial objectives
• How you intend to use the annuity
• Your financial time horizon
• Existing investments, annuities and insurance
• Liquidity needs
• Liquid net worth
• Risk tolerance
• Where the money to purchase the annuity is coming from
• Tax status

2. Florida Gives You Time to Review Your Annuity

Here's a Florida consumer protection every annuity buyer should know.

Think of It as Your Opportunity to Double-Check the Decision

Once you receive your actual contract, don't simply file it away. Use the review period. Look at:

• The surrender schedule
• Withdrawal provisions
• Interest-crediting terms
• Income provisions, if applicable
• Optional riders
• Rider or contract charges
• Death-benefit provisions
• Any other guarantees or limitations that influenced your decision

And make sure what you see in the contract matches what you thought you were buying. Florida's consumer guide specifically tells consumers to read their contracts and make sure they understand what they cover.

3. Be Especially Careful When Replacing an Existing Annuity

Sometimes replacing an existing annuity with a new one can make sense. Sometimes it may not. What matters is understanding both sides of the transaction.

When an agent recommends an annuity replacement in Florida, the Florida Department of Financial Services says the agent must provide a disclosure and comparison involving the proposed annuity and the existing annuity. The agent must also provide a document explaining how the agent is compensated for the annuity sale.

Before replacing an annuity, don't just ask “What am I getting?” Also ask “What am I giving up?”

4. Florida Has a Guaranty Association — But Understand What It Means

An annuity is a contract with an insurance company. That means the financial strength and claims-paying ability of the issuing insurer matter.

5. Know Who You're Working With — and Ask Better Questions

You don't have to become an annuity expert before buying one. But you should understand enough to ask good questions.

Florida's Department of Financial Services says annuities must be sold by appropriately licensed and appointed insurance agents and encourages consumers to verify licensing status. Its consumer guide also specifically identifies checking the licensing status of an insurance or securities professional as a consumer responsibility.

But verifying a license should only be the beginning.

That's a much better foundation for making an informed decision.

Florida Annuity Buyers Have Protections — But Your Decisions Still Matter

Florida provides meaningful consumer protections around annuity transactions. Annuity recommendations are subject to a best-interest standard. Consumers receive time to review their contracts. Replacements involve additional disclosure requirements. Agents must be appropriately licensed. And Florida has a guaranty association that may provide protection when an eligible member insurer becomes insolvent.

But consumer protections don't eliminate the need to understand what you're buying. There is no one-size-fits-all annuity. An annuity that makes sense for one Florida retiree may be completely inappropriate for another based on income needs, assets, liquidity, timeline, risk tolerance, tax situation and retirement goals.