There are no direct or recurring fees associated with buying a Deferred Income Annuity. For a standard single life policy, the only numbers you need to worry about are:
(1) the premium you pay,
(2) the annual or monthly income that you’ll receive, and
(3) the age at which your income will start.
As with any product, the seller needs to cover their expenses and leave room for a profit for the sale to make sense. With a Deferred Income Annuity, all expenses incurred by the insurance company, including the commission they pay to the agent, broker, or advisor who sells you the product, are reflected in the amount of income they can offer. There are no future charges or fees that will affect your income benefits.
But, being quoted a net price doesn’t mean that the product is cheap or the commission low. It’s still a good idea to compare quotes across carriers. Insurance companies that pay lower commissions, have better expense management, and are able to generate higher investment returns will be able to offer higher income benefits. Typically though, you’ll sacrifice the stability of the insurer, reflected in their credit rating, to secure a higher income amount.
And one good way for you to determine if the commission is reasonable: just ask the person selling you the product how much they are being paid.
Head to the DIA Guide to learn more about the product, how it works, and whether it makes sense for your retirement.