You can buy
annuities
through financial advisers,
bank representatives, or insurance agents, or in some cases directly
from the issuer. Some salespeople offer products from a single
provider, and others may allow you to select the contract that
works best for you from among those offered by several providers.
When you buy an annuity directly from the issuer,
you pay a sales charge, or commission. The amount is typically
figured as a percentage of the
principal
you invest, though it’s not quoted separately, as the sales
charge on a stock purchase or a
load
mutual fund
is.
You can ask what the commission structure is,
and you may be able to get a sense of what you’re paying
by comparing the cost of comparable contracts. Part of the price
difference reflects that charge.
In some contracts, there’s a
back-end
load
rather than an up front commission. Then you
pay higher management fees in the first seven or ten years of
the contract. A portion of those charges compensates the salesperson
for selling you the contract.
