Buy Annuities in NY
In New York, as with all other states, the insurance company must belong to the state Guaranty Association. It is illegal for any company to advertise this, however, because of the fact that potential customers might believe that there is an affiliation or that the guaranty association promotes one company over another. All insurance companies must belong to the state’s particular Guaranty Association, but the Guaranty Association does not promote any one agency. Instead, their purpose is to make sure that the company will remain solvent with a checkup on every insurance company within the state at least once per year.
In the event that a New York life insurance agency goes under, the New York Guaranty Association will protect your annuity up to a total of $500,000. The national minimum is $100,000, but New York boasts the greatest amount of guaranty insurance of any state in the U.S. This makes purchasing an annuity not only incredibly easy to do in New York State, but it also makes this location one of the safest places to hold your annuity.
Types of Annuities
Insurance companies usually offer the same type of contract to multiple states, but because the laws tend to be tougher in NY, sometimes it may seem that the options are a bit more limited in this state than in others. That’s not necessarily a bad thing. Instead, it tends to mean that only the best products are offered here because insurance companies are less willing to take risks with your money.
You will always find the typical deferred and immediate annuities. These are annuities that do not begin payments right away, and annuities that begin payouts in less than one year, respectively. Within these contracts, you will find a lot of variation, even within NY. Although New York has stricter laws, generally speaking, the quality and variety of the annuities offered is not impacted thanks to the large number of people interested in purchasing within the state.
In NYS, it’s important to remember a few things about immediate annuities before you enter a contract. These annuities have a fixed rate that they pay out each month, usually a nice round number like $500—depending on the amount in the annuity and the specific terms that have been agreed on. However, once the annuitization period has begun, there is no protection against inflation. Your payment will stay the same, but $500 now is not likely to be worth the same as $500 in 20 years.
Also, you typically cannot withdraw extra money with this type of annuity. This can only be done if you utilize the free look period that companies are required by NYS law to adhere to. This lasts up to 10 to 30 days after the annuity contract has been signed. If you have second thoughts about anything, using this feature can help you to back out of the contract and save your money—especially if you feel that you have been pressured into a sale.
However, immediate annuities meet a very specific need. They provide the annuitant with lifelong income, regardless of what happens to the economy. They are not for everyone, but many do benefit from this type of annuity.
Deferred annuities sold in New York also have specific rules that they must follow. One of the benefits that becomes noticeable right away is that partial withdrawals can be made outside of the free look period. Depending on when these are made, the annuitant may be subject to a penalty fee, but this goes away after a maximum of ten years. In NY, most insurance companies will not penalize you for withdrawals that are below 10 percent of the annuities total value. This needs to be addressed on a case by case basis, so it is important to know what the rules are for the specific contract that you are looking at before you sign anything.
Deferred annuities tend to be best for people that are not retiring within the next ten years. However, if you have questions about what’s best for you, get in touch with a licensed agent today for more specific guidance.
You are able to purchase fixed, variable, or equity indexed annuities in New York. Fixed annuities can be sold by any licensed life insurance agent, while variable and equity indexed annuities require further securities licensing. If you are unsure of where to start with your annuity search, check out the resources on our website, or head over to the official New York State Annuity Guide.
Final Things to Know About Buying an Annuity in New York
Just like in other states, you will be penalized if you begin withdrawals from your annuity before the age of 59 ½. Take this into account before you begin a contract. However, emergencies do arise and sometimes this is unavoidable. Just be sure to talk to a financial professional before you do anything so that you can avoid as many fees and penalties as possible when you access your money. If you are rolling one product over into another, be sure that the process is handled by a trained professional in order to avoid penalties whenever possible.
Another thing to remember is that in NY, death benefits are not considered a surrender. This means that if you purchase an annuity and then pass away, your beneficiary will not be liable for paying a surrender fee—no matter when in the life of the annuity you pass away. This does occur in other states and is not unique to NY, but it is one of the big questions that annuity customers have, and it is one of the many things that makes the purchase of a contract in NY a little bit easier.
The individual has more rights and more protections in NY than in many other states, especially when it comes to the purchase of an annuity. This can include a NYS agent who suggests you purchase an annuity with a non-NY contract. Although this may be legal, it is not ethical and it’s not in your best interests. If you do have concerns about the way that an annuity is presented to you, it’s important that you report this. The New York State Department of Financial Services takes these things very seriously. Call them at (800) 342-3736 to file a complaint if you believe that an insurance company or a product offered is in violation of the law or is unethical.