Are Annuities Good or Bad?

I am an annuity specialist, and I have heard all the objections from insurance producers and clients on why you shouldn't sell or purchase these financial products. Unfortunately, these objections are based on myths that I would like to address to help you make an educated decision based on facts.

First, let's start with addressing what an annuity is and how it works:

• An annuity is a tax-deferred investment for your money that fits as a great long term solution. This means you save money by not paying taxes each year on the growth. You just pay taxes when money is withdrawn.
• Annuities come in different shapes and sizes: Variable, Index, Fixed and Immediate.
• Index and Fixed Annuities provide complete downside protection from the market and still allow upside potential. This may be a fixed interest or following the market up to a limit of growth. Did I mention no losses????

Myth: If I ever want to get access to my money, I can lose thousands of dollars.
Fact: 99% of the annuity products available allow the owner/annuitant to withdraw at least interest earnings without any surrender charges. At least 60% of annuity products allow 10% of the annuity value to be withdrawn each year without surrender charges. How is that CD liquidity working for you?

Myth: Bonds are a much better investment because the interest rate is higher.

Fact: Bonds only grow when interest rates are dropping. As everyone is hoping for higher interest rates, did you know that bonds will lose you money as interest rates increase? You didn't know that?!?! Maybe it is time to re-evaluate your bond allocations.

Myth: Index annuities are a terrible deal with caps of 4.75%.

Fact: By providing downside protection from the market, this option still puts you ahead of the game. Here is a great example: If you have 4 quarters and take a 50% loss, how many quarters do you have left? 2 quarters. Now, if you would like your 2 quarters back, how much growth do you need? 50%? Guess again...100%!!!

There is a lot more information that I will address about annuities in future posts and how they can help your retirement future, but stop losing money and look at what these products have to offer you.