Annuity Myths Debunked
Annuities are an often-misunderstood investment option. They can be complex, and offer many different features, which scares some away from utilizing them. In this article, we will go over common annuity myths and debunk them.
Myth 1: All Annuities Are the Same
Annuities have a large range of options. There are several different categories and subcategories. Such as immediate and deferred annuities. As well as fixed and variable annuities. You can also add rider on to create even more options. Additionally, each company will vary on what they offer. With so many options, you should be able to find one that works for you.
Myth 2: Annuities Have Low Rates of Return
Certain types of annuities have set interest rates. When you sign the contract, you are guaranteed to receive that interest rate for a set amount of time. You will have to limit your access to the money for that set amount of time. But in return you receive a guaranteed interest rate that is higher than what a savings account or CD offers but with the same level of security.
Myth 3: Annuities Have Very High Fees
The fees involved in an annuity will vary depending on the type of features it includes. Variable annuities tend to have higher feed since they include a management fee. It is important that you understand all the expenses involved before getting an annuity. When shopping around, be sure to get a detailed list of fees and expenses for each annuity.
Myth 4: The Insurance Company Keeps Your Money When You Pass
A very common annuity myth is that the insurance company always keeps your money when you pass. This is not entirely true. The payout after you pass will depend on the
For example: if you choose the life only
Myth 5: You Cannot Access Your Money
During your accumulation
Myth 6: Annuities Are Not Worth the Wait
With a deferred
They are a good option if you are nearing retirement and you do not want to take risks in the stock market, but you do want higher rates of return than a savings account or CD.
Making a Choice
Now that you understand the truth behind these common annuity myths you need to analyze your finances and see if an annuity is right for you. If you are unsure, meet with a qualified financial advisor who can help you determine if one is right for you and what annuity you should choose.
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