Guide to Annuities Part 1
What is an Annuity?
Annuities can be very confusing; as confusing as the waterfall in the photograph. Insurance agents often sell them to people making all kinds of promises: “Save on taxes”, “Make money in the market without downside risk”, and “Create a guaranteed income stream for retirement”. There have been bad practices by insurance sales people and many clients have been sold annuities for the wrong reasons. In this two-part guide to annuities I will explain the basics, what they can do for you and what they are unlikely to do for you. I will also explain the different types of annuities and some of their features, pros, and cons. Part 2 of this guide to annuities will go over the more complex annuities in greater depth including the most intricate feature: the income rider. Annuities can be powerful tools to accomplish certain goals, but they can also be expensive boondoggles when bought for the wrong reasons.