myths and facts about annuity

There are several Myths & Facts about an annuity. In reality, an annuity is converting a huge sum of money into an income that is paid out regularly every month. For example, when your IRA account is annuitized, you are opting to receive regular payment under the IRA act. By definition “annuity” is a life insurance contract between a client and a life insurance company. It is a simple form of investment of a large amount of money being invested for a guaranteed income flow for a set period as chosen by the client.

There are several Myths and Facts attached to annuities

Only clients without knowledge or experience opt for an annuity is a myth. However, the fact is that an appropriate annuity is a right choice to make your investment grow strong, no matter if you are inexperienced or conservative. It all depends on your needs after retirement and how you wish to channelize it in annuities. Therefore, an annuity is a guaranteed income plan that covers all your essential needs. It plays an important role in supporting your expenses without the risk of fall out.

An annuity is expensive is a myth. Overall the fact is that annuities are a lifetime income with a guaranteed payout. They also offer benefits to income. Moreover, in other investments it comes with an additional fee. Annuities offer purchase options that help in growing your savings. This prevents them from loss and invariably the savings are passed on to your beneficiary. Therefore it is a balanced investment that grows without tax. What more you can ask for in a huge lifetime investment?

When you invest in an annuity you could end up losing money if you die early? Absolute myth. Most clients choose or are advised to go for annuity income with beneficiary payout. It is equal to the amount invested in an annuity. Several variable annuities offer death benefits that are enhanced at an added cost. For this reason it is a definite source of income given to a beneficiary. This is an important feature that draws people to choose an annuity backed by claims. In general, these are some of the myths and facts that are attached to annuities.

The Pros and Cons of annuity

The pros reflect on protection guaranteed on assets or investment, including growth in value of cash. An annuity empowers you to direct your cash flow or savings for a meaningful chosen plan. This in turn will help your loved ones to enjoy the benefits it offers. Moreover, it makes sense to protect your wealth from unwarranted risks. It is an essential gateway to direct your income tactfully in an effective manner. Adding value to consistent money flow by creating a hedge around inflation.

The biggest con about an annuity is that it is a loss of liquidity. This is against the definition of an annuity: a liquid amount of cash converted into fixed assets. This in turn gives guaranteed returns periodically. It is translated into a steady income with such ease that supplements social security. Perhaps, the most sought after as long as you live. The nest is spread out to receive cash flow uninterruptedly. An ideal solution for all those retiring in need of guaranteed income.


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