How To Trade Your Underperforming Annuity For Another

Shawn Plummer

CEO, The Annuity Expert

Do you have an annuity that’s not performing well? Maybe it’s underperforming due to a bad investment, or maybe the insurance company is just overcharging. If so, don’t worry – there are options for you! In this guide, we’ll talk about how to trade your annuity for another and what some of the benefits of doing so might be.

Common Reasons To Trade Your Annuity For Another

Not all annuity products are created equal. In fact, most annuities are underwhelming. So why are these annuities being sold in the first place? Common reasons are:

  • Product limitations of the financial advisor or insurance agent.
  • Commission-driven sale by the financial professional.
  • The financial professional’s lack of annuity knowledge.
  • The interest rate environment at the time of the annuity purchase.
  • The evolution of the annuity at the time of the purchase. Consumer products are always getting better.

Reasons To Trade Your Annuity For Another

  • Better upside potential
  • Diverse index strategies
  • Converting from accumulation to lifetime income
  • Higher income payouts than previous annuity
  • Getting out of the market (variable annuities) and obtaining principal protection
  • More liquidty
  • Long-term care benefits
  • Lower Fees
  • Inflation protection
  • Shorter terms
  • Enhancing a death benefit for beneficiaries

How To Exchange An Annuity For Another

Nonqualified Annuities

Nonqualified annuities can be transferred without a taxable event via 1035 Exchange. The exchange must happen directly between insurance companies. There is a form in the annuity application to instruct the insurance company to execute the transfer.

Qualified Annuities

IRA Annuities can be transferred without a taxable event via a Direct Transfer. It is preferred (not mandatory) the transfer be made directly between insurance companies by utilizing a transfer form in the annuity application.

How Do I know I can trade my annuity?

Annuity providers are comfortable with replacing annuities as long as the replacement makes sense to both the consumer and the insurance company. A replacement will be considered if the following requirements are met:

  • A consumer must not take a loss due to a surrender charge. Bonus annuities can help offset the charge, and can be accepted for the replacement at long as there is a not a loss.
  • The annuity owner has been in the current annuity for at least 3 years.
  • The overall result of the replacement is a better plan for the consumer.
  • Finally, the current financial profile profile of the annuity owner must be suitable to the new insurance company.

What Annuities Can Not be Replaced?

Find out If Your Annuity Can be exchanged for another

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Why you can trust The Annuity Expert

At The Annuity Expert, we strive to help you make confident financial decisions regarding annuities. Content provided is created by an independent licensed financial professional.

The Annuity Expert is an online insurance agency that provides the widest variety of annuities in the United States. When you buy an annuity directly from us, we receive a predetermined commission from the insurance company (not you). While your annuity is active, clients are not charged any servicing or management fees. Learn more.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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