When offered by a familiar and trusted professional such as a banker, annuities may at first glance appear to be an attractive and secure investment. However, there are a number of steps and precautions one should take when deciding whether or not to invest in an annuity. People need professional planning advice when making any investment decisions; however, it is very important that each individual be fully informed. There are many options for protecting assets and obtaining Medicaid assistance, but most annuity salespeople are not qualified to give advice regarding issues such as Medicaid regulations, and probably understand very little about other options that may be available for protecting assets.

When deciding whether an annuity or any investment product for that matter makes sense, one should take one's time and deliberate carefully as the varying underlying terms and expenses can vary greatly from one annuity to another. Compare costs among companies as they may vary for the same amount of income. It may be less expensive to just purchase life insurance if money for one's survivors is of highest priority (www.aarp.org). It is important to understand the surrender charges and to understand that the principal of the annuity will be inaccessible without triggering surrender charges for a certain period of time. One need also realize that even with fixed immediate annuities, the promised monthly payout can vary based on the options chosen and the insurer.

Annuity contracts typically have a period of ten or more days termed a free look period, during which one can get back the purchase payments and terminate the contract without paying any surrender charges. One can continue to ask questions in this period to make sure they understand their annuity before the free look period ends.