Is my annuity a scam? My husband bought it before he died and I can’t get any answers.

Is my annuity a scam? My husband bought it before he died and I can’t get any answers.

Dear Fix My Portfolio,

My late husband set up a lifetime annuity for me with a well-known company. I get a monthly deposit into my checking account. I called them for the value and they told me there was no value to it. I don’t see how it could generate monthly income if there was no value to the account. I asked to see the original paperwork and they won’t give it to me.

This doesn’t sound right to me. Am I being scammed somehow? I don’t even know who to ask for help.

Unhappy Annuitant

Dear Unhappy Annuitant,

Your husband probably had very good intentions about arranging an annuity for you so that you’d have monthly income for life even after he was gone. However, he seems to have fallen a little short if he didn’t explain what he set up for you and give you all the account details.

It also seems like the company you’re dealing with is not being very helpful either. That often happens in the financial-services world, which has its own language for things that do not translate well to everyday English. I usually treat these situations like a computer malfunction: Rebooting is always the first step. Have you tried simply calling again and seeing if you get a different answer from another representative? Customer service can be hit-or-miss, and training can be uneven.

If that doesn’t work, try asking for a supervisor or an account manager; there should be one assigned to your case. There should also be a notation of the salesperson who dealt with your husband, and you could ask to speak to them. Your original contract should be available to you, and it probably is through online access to your account or in your husband’s files. If you can’t find it on your own, there has to be somebody at the company who can help you locate it.

This is your money, so don’t stop until you get the answers you want.

As for the mystery account value, that sounds more like a miscommunication between you and the customer-service rep about the basics of the type of annuity you have. When your husband established the account, he likely paid a lump sum of several hundred thousand dollars to the annuity company. In exchange, they promised to give you a certain monthly sum for the rest of your life. That’s the simplest form of the annuity transaction.

Because of that setup, there is no account balance like you would see in an investment account, or even a whole-life insurance policy that has a cash-balance feature. You pay in your amount, then they pay you back monthly for as long as you live. Any value you want to place on that account while you are getting payments would be theoretical, based on the projected amount they still have due to pay out to you. Say you are 80 and getting $1,000 a month. If you expect to live another 15 years, that’s about $180,000. But you could live to 102, or you could die earlier. It’s an actuarial gamble.

You can complicate annuities further from there with all sorts of bells and whistles, like inflation adjustments on the payments, survivor benefits and various ways to measure the growth in the account. Some annuities don’t even have a monthly payout — they are annuities because they are an insurance contract that promises a certain rate of return back to the owner, but the payments don’t have to be annuitized into that regular lifetime scheduled amount.

You generally can’t accelerate your annuity payments, borrow against them or modify them. Your only recourse to get out of the deal may be to surrender the annuity, which could come with taxes and fees, and then invest what’s left another way.

Once you get to the right representative, they should be able to give you a bottom-line payout number if you close the account. If you’re having a problem when you ask about the value of your account with customer service, you could try asking them instead about the “surrender charge” and “surrender value” for your contract. They very likely will escalate the call to a salesperson who will try to convince you to stay and make it sound very complicated to get out of the deal. But just ignore that, and ask for the payout amount.

This is where having an advocate on your side could come in handy. If you have a financial adviser, this should be an easy call for them to make with you. A huge caveat on this: Make sure that anyone who helps you is a fiduciary, meaning they have your financial best interest at heart. Otherwise, they could just be trying to help you get out of your annuity in order to sell you something else and earn a commission. You can find other financial help for seniors from organizations like the National Council on Aging or AARP.

Getting all of this information is important, but be aware that cashing out of the annuity might not be the right thing for you. Annuities are complicated, but they aren’t necessarily bad. The major reason they get criticized is because they are hard for people to understand, and your money is really something that you deserve to understand. To know if it’s right for you, you have to look at your overall financial situation and decide the best move, and it shouldn’t be frustrating or hard to get simple account information when you call on the phone. Definitely keep trying and find out all the information you need to make that decision.

Do you have questions about retirement, Social Security, where to live or how to afford it at all? We want to hear from you. Join the conversation in ourFacebook community: Retire Better with MarketWatch.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

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