Getting financial advice on complicated insurance products is, well, complicated.
Most life insurance with investment options, long-term care insurance and annuity products come with a dizzying array of options and many pages of fine print, the merits of which are debatable for your bottom line. That makes solid, unconflicted advice necessary.
The money at stake is staggering. An annuity, which you buy with a lump sum to get payouts as you age, can cost hundreds of thousands of dollars up front, generating thousands of dollars in fees.
The person selling you the policy might not even understand all the implications for your retirement.
"The complexity of some insurance products has outstripped the financial adviser's ability to give reasonable advice," says Glenn Daily, a fee-only insurance consultant based in New York.
The first stop on the road to an annuity for many folks is when they talk about retirement to a financial adviser, from whom it is possible to get unconflicted advice if you choose a fee-only certified financial planner. This kind of adviser, known as a fiduciary, can tell a client what kind of annuity to purchase and then recommend a trusted salesperson — who will likely earn some kind of commission on the sale.
Some CFPs work on a hybrid model, charging an hourly fee for their financial planning, but can also sell you insurance.
Another option is to employ a fee-only insurance consultant who will offer an independent view on the policy you are considering. Fees can run about $300 an hour.
Going it alone can be difficult because there is not a lot of independent research available for the average consumer, and policies are difficult to compare.
Some companies sell commission-free products directly to clients. Among them are Amica Mutual Insurance Company and TIAA, as well as Lincoln Financial Group, which offers a new fee-only annuity. But buyers should shop around, because the representative at one company will not have pricing to compare with any of the other companies' products.
Daily says the safest option to handle on your own is a single-premium immediate annuity, for which you pay a lump sum and then receive monthly payments. Ask a salesperson about her commission structure and whether she has any additional compensation.
When you move up to more complicated policies, the analysis you need may only be available via subscription to professionals.
Beth Pinsker writes for Reuters.
