We are regularly asked if an Annuity is a good or bad thing
for clients, and like most answers in our business and in life, the answer is,
“It really depends!”
At its most basic level, an annuity is a life insurance
product designed to pay some level of income to the annuitant. The investor gives the annuity product life
insurance company a certain amount of money, called the premium, and the life
insurer agrees to pay the annuitant a certain amount. These amounts can be monthly, quarterly,
annually for life, for a certain minimum period or both. This is an example of a fixed annuity. There are also indexed and variable annuities
where the value is tied to some kind of stock or bond investments.
There are literally thousands of different annuity products
with thousands of variations. As with
any financial product, whether the product is appropriate for a particular
client depends on exactly what the client’s needs, sophistication, financial
situation and risk tolerance are.
They also typically have steep surrender charges if the
annuity is cashed out before a certain length of time.
When considering whether an annuity product is good
for your financial goals you should make sure that you fully understand the
product and that it is offered by a financially stable and large life insurance
company with a long history.White House Financial & Settlement Consulting helps families live an easier and less stressful life through the proper management of their financial resources. We do this by acting as our clients’ trusted advisor providing a personal touch customized to the client’s needs! Please visit our web site at www.whitehousellc.com for more information!