Annuities – Are They Worth It?

Is Investing in Annuities a Viable Option?

By Max Oser, Contributing Writer

Image Courtesy of: acoustock.com

You can’t hate annuities because they bring you the money

It’s hard not to love money.  Even when you aren’t concerned about it, you have to depend on money because today’s world of today is all about it.

Money becomes more important once you arrive at retirement age.  This is the time you should no longer worry about how to support your living costs.  For instance, you might have invested in annuities.  These are your lifelines because they may become your biggest financial provider when you are no longer able to work and earn a living.

Investing in annuities is a smart choice.  However, it seems that some people are having a hard time trying to convince themselves about whether to invest in annuity programs.  You may have heard a few grumbles here and there about, for example, how terrible the equity index annuities are.  It’s rather easy to be influenced with such a claim, isn’t it?  However, if you take a closer look, you’ll know that these investment programs are only meant for the betterment of the society.

The reluctance to invest in annuities may be because of fear of the unknown.  Typically, most people are unfamiliar with investment and it has often been associated with unpredictable risks.  However, annuities are different because, regardless of how bad the economy is, your capital investment won’t likely be affected.

[pullquote]Perhaps the idea of investing in equity index annuity still scares you.  Don’t worry though, because your options don’t end here.  There are a variety of annuities available. [/pullquote] Can you benefit from equity index annuity?

In terms of equity index annuity, this retirement plan provides you with a way to earn interests based on another index.  In most scenarios your investment will be based on the S&P index but some other standards are similarly applicable.  This is where the confusion starts.  A lot of people believe that they are buying shares from a company. In reality it has nothing to do with buying stocks or shares.

Can you earn right away from immediate annuity?

Perhaps the idea of investing in equity index annuity still scares you.  Don’t worry though, because your options don’t end here.  There are a variety of annuities available. The immediate annuity is a great option to start with.  It starts paying soon after the contract has been purchased.  The longest waiting period would be a year.  Anyone can invest in this retirement plan.

If you have a lump sum of cash you can hand it over to an insurance company of your pick, a month later you may receive a cheque.  The insurance company pays you on monthly basis until the end of your contract.  You may also choose to invest in a lifetime plan where the insurance company pays you every month for the rest of your life.

Variable annuities are risky – is this true?

If you have more funds to invest, you may want to try the variable annuities.  This is one of the most interesting retirement plans because you can invest as much as you want.  Many people are not aware of this and so they are not inclined to invest in variable annuities because they fear losing their initial capital.

There are many benefits to obtain from variable annuities, one of them being guaranteed payment to your beneficiaries in the event of your death. [pullquote]There are many benefits to obtain from variable annuities, one of them being guaranteed payment to your beneficiaries in the event of your death. [/pullquote] The minimum payment would be equivalent to the sum of your initial capital.  Your beneficiaries may also receive earnings from interest rates calculated annually.  If the present amount of your investment exceeds the amount of initial capital plus earnings from interest rates, then your beneficiaries may receive full payment based on the new amount.

Get stable rates with fixed annuity

If your main goal is to invest and earn a fixed amount of monthly income, then you should look nowhere else but at the fixed annuity.  The fixed annuity is known for its ability to pay a steady return to investors.  It seems that the returns are lower than a lot of other annuities; however, if you want to play it safe, this is the option you should go for.  One thing for sure is that you may enjoy stable rates until the end of your contract.  This means you can accurately estimate or even know for sure how much you are earning every year.  There is a huge possibility for you to double your earnings if you choose to keep your funds untouched.

You are making a smart move if you choose to invest in any annuity programs.  These programs are among the most significant tools that anyone can use to fund their retirement. One of the greatest benefits you may enjoy is a guaranteed stream of income for life.  Investing in an annuity program is also one of the smartest ways to save and grow your funds.   If you love your money, you’ll love investing in annuities.

Max Oser is a professional finance & economics articles writer and annuity advisor that help people in finding and comparing best annuity rates for their needs.