Wednesday, March 4, 2009

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. You pay taxes only on the income the annuity provides.

Cons:

Annuities are Different: Like all insurance related products annuities are contracts and they are not the same. Because they are many differences it can be confusing for the consumer, but this is why it is important that you work with an independent insurance agency (like us), so we can find the right annuity contract with the appropriated benefits to meet your financial goals.

Lower returns: Annuities are for conservative investors that want stable returns, thus you would be missing out on possible gains (and losses) of riskier investments.

Inflexible: Annuity contracts are less flexible than other investments, which is why the decision process should be slow and deliberate to ensure that you are purchasing the annuity for the right reasons.

About Me

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6119 Ridgeview CT #500, Reno, NV 89519, 775-284-8200 or kevin@ardentinsurance.com., United States
http://www.ardentinsurance.com College BS in Business Administration (University of Nevada, Reno) 1987. Independent Farmers Insurance Agent 1987-1997; Part time financial sales positions 1997-1999; Co-founder and President of ClientFlex Corporation 1999-2004; Lucini/Parish Insurance 2004-2005; Co-founded (with Tammy Brunson) Ardent Insurance LLC (2005-2007); Changed entity to Ardent Insurance Inc (2006-present). Insurance Designations: LUTCF. Insurance Affiliations: Big I (Independent Insurance Agents of America); Trusted Choice Approved Agency; Professional Insurance Associates, Inc. (Affiliate); Local Business Associations: Northern Nevada Insurance Agents - Member; Community Associations: Northern Nevada Endurance Training - Active Member.