How to Buy an Annuity (Step-by-step)

So, you decided to buy a MYGA annuity online – congrats! You're taking a smart step to grow and protect your money.

But you might be wondering, "What happens next?"

Applying online is easy, but knowing what comes after is important. This article is here to help.

We'll walk you through exactly what to expect after you click that "apply now" button for your MYGA annuity.

Let's get started!

Fill Out the Online Application

The first step after deciding to buy a MYGA annuity online is filling out the application. Think of it like any other online form you've completed.

You'll usually find a button on the online marketplace's website that says something like "Apply Now" or "Get a Quote."

Once you click that, you'll be taken to the application pages. Here's what you can expect to fill in:

Your Personal Information: This includes the basics like your full name, address, date of birth, phone number, and email address. The insurance company needs this information to create your contract.
Choosing Your Annuity Terms: This is where you decide how long you want the guaranteed interest rate to last. You'll likely see options like 3 years, 5 years, 7 years, or even longer. Pick the term that best fits your financial goals and how long you plan to keep your money in the annuity.
Naming Your Beneficiary: This is a very important part. Your beneficiary is the person or people who will receive the money from your annuity if something happens to you. You'll need to provide their full names and possibly their dates of birth and addresses. You can usually name more than one beneficiary and decide what percentage of the money each person should receive.

Take your time while filling out the application and double-check all the information before moving on. Accuracy is key to a smooth process.

Once you've filled in all the required fields, you'll usually see a button to move to the next step, which is choosing how you want to fund your annuity.

Choose Your Funding Method

After you've filled out your application, the next step is to tell the online marketplace how you want to put money into your new MYGA annuity. This is called choosing your "funding method."

Think of it like choosing how you want to pay for something you buy online.

You'll usually have a few options to pick from:

ACH or Wire Transfer: This is like sending money electronically from your bank account to the insurance company. It's usually a quick and secure way to transfer funds. If you choose this, you'll get instructions on the bank details you need to send the money to.
Check: You can also choose to send a physical check through the mail. If you pick this option, you'll likely get instructions on where to make the check out to and the address to send it to. Keep in mind that it might take a little longer for the funds to arrive and be processed this way.
Rollover from Retirement Accounts: If you have money in other retirement accounts like a 401(k) or an IRA, you might be able to "roll it over" into your MYGA annuity without tax penalties (in most cases, but it's always good to check with a financial advisor). If this is an option for you, you'll need to provide details about your existing retirement account. The online marketplace or the insurance company will guide you through the specific steps for a rollover.

Once you've decided how you want to fund your annuity, you'll need to provide the necessary information.

For example, if you choose wire transfer, you'll need your bank account details. If you choose a rollover, you'll need information about your current retirement account.

The online application will guide you through providing this information. Just make sure you double-check everything to avoid any delays in getting your annuity started.

Confirm Your Identity

Because this involves your money and financial security, insurance companies have rules to make sure it's really you making the purchase.

That's why the next step in the process is usually a short video call to confirm your identity. Think of it like showing your ID in person, but you're doing it online.

Here's what you can expect with this step:

Why the Video Call? This call helps protect you from fraud and makes sure everything is legitimate. It's a standard practice in the financial industry.
Scheduling Your Call: After you've completed the application and chosen your funding method, you'll likely get a notification or email with instructions on how to schedule your video call. You'll usually be able to pick a time that works best for you from the available slots. These calls are typically short, maybe just 5 to 10 minutes.
What You'll Need: For the video call, you'll need a computer or smartphone with a working camera and microphone. You'll also need to have a valid government-issued photo ID ready, like your driver's license or passport.
What Happens During the Call? During the call, a representative will likely ask you to show your ID to the camera so they can verify your identity. They might also ask you a few simple questions to confirm the information you provided in your application. Just be yourself and answer honestly. It's a straightforward process.

This video call is a quick but important step to ensure the security of your annuity purchase. Once it's done, you'll be one step closer to your MYGA being in place.

Review and E-Sign the Contract

Once your identity has been verified through the video call, the next thing you'll receive is your official annuity contract. Because you bought online, this will almost certainly be delivered to you electronically, usually via email or through your account on the online marketplace's website.

Here's what to expect:

Checking your email: Keep an eye on your email inbox (and maybe your spam folder, just in case!) for a message containing your annuity contract. If you have an account on the online marketplace, the contract might also be available there for you to download and view.
Review the contract: This is a really important step – take the time to carefully read through the entire contract. It might seem long, but it contains all the details about your MYGA, including the guaranteed interest rate, the length of the guarantee period, and any other important terms and conditions. Don't hesitate to reach out to the online marketplace's customer support or the insurance company if you have any questions about anything you read.
E-sign the documents: After you've reviewed the contract and are happy with everything, you'll need to officially sign it. Since you're doing this online, you'll likely use an "e-signature." This is a digital way of signing documents. You might get a link in the email or on the website that takes you to a secure platform where you can review the documents again and then electronically sign them. This might involve clicking a button, typing your name in a specific format, or drawing your signature with your mouse or finger.

E-signing is a quick and convenient way to finalize your agreement. Once you've e-signed the documents, your part in the initial paperwork is usually complete, and your application will be officially submitted.

Application Submission

After you've e-signed all the necessary documents, your application will be officially sent in. Think of it like hitting the "submit" button on any other online form.

Here's what you can expect after submitting:

Confirmation Message: You'll usually see a confirmation message on the screen or receive an email letting you know that your application has been successfully submitted. This message might also give you a reference number for your application, which you should keep for your records.
What Happens Next Indication: The confirmation might also give you a general idea of what to expect in the upcoming steps. It might say something like, "We will now forward your application to the insurance company for review," or "You can expect a call from the insurance company within the next few business days."

This confirmation is a good sign that you've completed your part of the initial process. Now, the application moves to the next stage, which involves the insurance company reaching out to you.

Get a Call from the Insurance Company

Soon after you submit your application, you can expect a phone call directly from the insurance company that will be issuing your MYGA annuity.

Don't worry, this is a normal part of the process and is designed to make sure you fully understand what you've purchased.

Here's why they'll call and what they'll likely talk about:

Making Sure You're Clear on Surrender Fees: One of the most important things they'll discuss is surrender fees. These are charges you might have to pay if you take your money out of the annuity before the end of the guaranteed period. They'll explain how these fees work and when they would apply. It's really important you understand this part.
Going Over the Terms of Your Annuity: They'll also likely go over the main details of your specific MYGA annuity, such as the guaranteed interest rate and how long that rate is locked in for (the guarantee period). This is a good chance to double-check that everything matches what you expected.
Your Opportunity to Ask Questions: This call is a perfect time for you to ask any questions you might still have about your annuity. Don't hesitate to bring up anything you're unsure about, whether it's about the surrender fees, the interest rate, or anything else in the contract. It's better to get all your questions answered before your annuity is officially funded.

This call is for your benefit, so be prepared to listen carefully and ask any questions you have. It's a key step in making sure you're comfortable and confident with your MYGA annuity purchase.

Transfer the Funds

After you've had the confirmation call with the insurance company and hopefully had all your questions answered, the next step is actually moving your money into the annuity. This is when your chosen funding method comes into play.

Here's what you can expect with the funds transfer:

When the Transfer Happens: The timing of the transfer will depend on the funding method you selected earlier.
- Wire Transfer: If you choose a wire transfer, the insurance company will likely provide you with instructions on when and how to initiate the transfer from your bank account. This usually happens relatively quickly, often within a few business days after your application is processed and the confirmation call is complete.
- Check: If you opted to send a check, you'll need to mail it to the address provided by the insurance company. Once they receive and process your check, the funds will be credited to your annuity. This process will naturally take a bit longer due to mail delivery and processing times.
- Rollover: If you're rolling over funds from another retirement account, the process might take a little longer as it involves coordinating with the institution holding your existing account. The insurance company will usually guide you through the necessary paperwork and steps for a smooth rollover.
How Long It Might Take: The exact timeframe for the funds to be fully transferred can vary depending on the method and the institutions involved. Generally, wire transfers are the fastest, followed by checks, and rollovers might take the longest. The insurance company should be able to give you an estimated timeframe during their confirmation call.
Confirmation: Once your funds have been successfully transferred and received by the insurance company, you'll typically receive a confirmation. This might be an email notification or an update in your online account with the online marketplace or the insurance company. This confirmation is an important record, so be sure to keep it.

With your funds now in place, your MYGA annuity is officially active and starting to grow based on the guaranteed interest rate you agreed upon. The next step is a period where you have a chance to review everything one last time.

Free-Look Period

Now that your annuity is funded, there's one more important step that gives you extra peace of mind: the "free-look period." Think of this as a safety net or a second chance to make sure you're completely happy with your decision.

Here's what you need to know about the free-look period:

What It Is: The free-look period is a set amount of time after your annuity contract is issued (and sometimes after it's funded) where you have the option to cancel the contract without facing any penalties or surrender charges.
When It Starts: The exact start date of your free-look period will be outlined in your contract, but it usually begins when you receive your official contract documents or shortly after your annuity is funded.
Why It's Important: This period gives you the opportunity to review all the details of your annuity one last time, now that everything is in place. You can take your time to read through the contract again, make sure it matches what you expected, and consider if it's truly the right financial product for you.
How Long It Lasts: The length of the free-look period can vary depending on the state where you live and the specific insurance company, but it's often between 10 and 30 days. Your contract will clearly state how long your free-look period is.
What If You Change Your Mind? If, during the free-look period, you decide that the MYGA annuity isn't the right fit for you, you have the right to cancel the contract. If you do this, you'll typically receive a full refund of the money you put in. The exact process for canceling will be detailed in your contract, but it usually involves sending a written notice to the insurance company within the free-look period.

The free-look period is there for your protection, so don't hesitate to use this time to ensure you're comfortable with your MYGA annuity.

Ongoing Management and Statements

Once your free-look period ends, your MYGA annuity is officially in full swing! While you don't need to actively manage it like a stock portfolio, you'll still receive updates and have ways to stay informed about your investment.

Here's what you can expect moving forward:

Regular Statements: You will receive periodic statements, usually on an annual basis, from the insurance company. These statements will show you the current value of your annuity and the interest it has earned over the past period. Keep these statements for your records.
Online Account Access: Most insurance companies and online marketplaces provide a way for you to access your annuity information online. You'll likely receive instructions on how to create an account or log in to their website. Through this online portal, you might be able to view your contract details, check your current balance, and see past statements.
Customer Service Support: If you have any questions or need assistance with your annuity in the future, you'll have access to customer service. You can usually find contact information (phone number and email address) on your contract documents or on the insurance company's website. Don't hesitate to reach out to them if you have any changes to your contact information, need to update your beneficiaries, or have any other inquiries.

While a MYGA annuity is designed to be a relatively hands-off investment during its guaranteed period, staying informed through regular statements and online access ensures you're always aware of your financial progress.

Withdraw your money

While your MYGA annuity is designed for a specific guarantee period, it's natural to think about what happens down the road when you might need to access your money.

Here's a brief look at what you can expect:

When the Guarantee Period Ends: Once the initial period you chose (like 5 or 7 years) is over, the guaranteed interest rate will expire. At this point, you'll typically have a few options. You might be able to renew your annuity for another guarantee period at the then-current interest rates, take your money out (though this might have tax implications), or potentially choose another option offered by the insurance company.
Withdrawals and Surrender Charges: It's important to remember that MYGA annuities are designed to be long-term investments. If you decide to take money out of your annuity before the end of the guarantee period, you will likely face surrender charges. These charges are designed to discourage early withdrawals and can significantly reduce the amount of money you receive. The specific surrender charge schedule will be detailed in your contract.
Annuitization (Optional): In some cases, you might have the option to "annuitize" your contract in the future. This means converting your lump sum of money into a stream of regular income payments that can last for a set period or even for the rest of your life. This is a decision you would typically make closer to retirement.

It's a good idea to keep the terms of your MYGA annuity in mind as you plan your future financial needs. Understanding when the guarantee period ends and the potential costs of early withdrawals will help you make informed decisions down the line.

Bottom line

Buying a MYGA annuity online involves a few steps after you click that initial "apply now" button.

From filling out the online application and choosing how to fund it, to that important identity verification video call and e-signing your contract, you've now seen the journey unfold.

You then had a confirmation call with the insurance company to ensure you understood everything before your funds were transferred.

Finally, you had the peace of mind of the free-look period to make sure it was the right decision for you.

Remember, while this article outlines the typical process, it's always important to carefully review all the documents you receive and don't hesitate to ask questions along the way.

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