You will probably buy your annuity from a licensed insurance agent, broker, or financial adviser. Standing directly behind these intermediaries are brokerage firms (for brokers and financial advisers), marketing organizations (for independent insurance agents), or the insurance companies themselves (in the case of career insurance agents).

Insurance agents arent licensed to sell variable annuities.

The transaction begins when you meet with the agent or broker who discusses your finances with you. After you choose a suitable product, the agent or broker will submit the application for approval.

You will eventually send the contract issuer the insurance company a check for at least the minimum amount (every carrier sets its own minimum initial premiums). Then the carrier sends you your contract. You will have 10 to 30 days to reconsider your decision and send the contract back for a refund.

Important participants in the annuity food chain include the following:

Annuity issuers: Only insurance companies issue annuities. There are hundreds of issuers, but the 25 largest firms household names like The Hartford, MetLife, and Prudential account for about 90 percent of all annuities sold each year.

Annuity distributors: Distributors include big brokerages (known as wirehouses ) like Merrill Lynch and Morgan Stanley, as well as independent broker-dealers like Raymond James and LPL. Banks like Bank of America and Wachovia also distribute annuities through their branches. Distributors serve as middlemen between the carriers and the producers. In many cases, they employ or supervise producers, making sure they comply with insurance and investment laws.

Annuity producers: Years ago, most insurance companies employed an army of career agents to represent and sell their products. While companies like AXA, Ameriprise, MetLife, and others still have these agents, many annuities are sold by independent agents, brokers, and bank officers.

Direct marketers. If youre the self-reliant type and you dont need an agent or broker to explain annuities to you, you can buy your annuity direct. Some but not all insurance companies will sell a no-load (that is, no sales commission) contract directly to you.

No-load mutual fund companies like Vanguard, Fidelity, and T. Rowe Price also sell no-load annuity contracts directly to the public over the phone or Internet or by mail. In the case of Vanguard and T. Rowe Price, their contracts are issued by third-party insurance companies. Relatively few people buy annuities direct, however.

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