Pros and Cons of Annuities
Pros: Lifetime Income: Immediate lifetime annuity contracts guarantee periodic payments for as long as you live. Thus, in this instance the risk of you living a long life is borne by the insurance company providing the annuity contact. Inflation Protection: Annuities can be customized to ensure that your monthly payout will keep pace with the cost of living. This protection is critical but the downside is this add-on will cost more. Principal Protection: One of the best features of a fixed and equity indexed annuities is that the face value of the annuity can be guaranteed to be equal to or above the amount you invested. You can guarantee that you (or your heirs) will receive back at least as much money as you invested. Tax Efficient: You can purchase an annuity with qualified retirement savings, which can save you money on taxes over taking a lump sum payment. You can also rollover qualified funds into a qualified annuity without any tax penalties.