April 22, 2021

Common Misconceptions About Annuities

If you are one of the many people today searching the internet for information about annuities, you might have noticed there is a lot of conflicting information out there. To clear up some of the confusion, and to help you determine if an annuity is right for you, I want to address some common misconceptions surrounding annuities, so you can make better decisions about your financial plan based on information.

Annuities are only for retirees

While the general population believes annuities are typically associated with retirement, they are a part of our everyday living. Did you know Annuities are the number 1 vehicle for things like paying professional athletes' contracts, paying a major settlement in a lawsuit—even our state of Florida Lottery winners are paid out of Annuities! In fact, any pension from a union, a school district, or most any pension plan probably involves an annuity. Historically, many companies, federal governments, and municipalities used Annuities to benefit us for many years, but in retirement, we are given the chance to take advantage of these valuable tools for ourselves.

They are too expensive

The truth is that many annuities have no cost or fees associated. Just like an investment, or any other retirement tool, the amount or number of fees and expenses can vary depending on the features involved and the type of annuity you are considering.

Invest wisely in an annuity based on your intended outcome: build savings or create income.

You don't always have to pay for the guarantees, features, and benefits you need. We can help you discover the options available to you that will avoid those costs.

The insurance company keeps my money when I pass away

With a fixed or variable annuity, your beneficiaries will inherit the value of your annuity at death. If your annuity value has dropped, then your beneficiaries will receive at least your remaining principal. With an immediate annuity, you may opt for provisions that will guarantee income to your beneficiaries of at least the amount you paid to the insurance company.

They are too complex

Not all annuities are complex. Annuities by design are pretty straightforward. You can however run into some confusion when it comes to benefit options. In truth, Annuities are a little bit of a specialty, so look for someone experienced in the field and qualified to sell any type of annuity.

All Annuities have a life insurance base with either an investment component, a growth component, or an income component. There are trade-offs and different levels and types of risk in all Annuities. Annuities offer guaranteed income streams upon retirement, but it is important to be familiar with the different types and how they work.

If you are considering Annuities, first determine which type of annuity is right for your needs. Are you looking for Income, Growth, Legacy? There are even annuities that can help bridge the gap when Long Term Care is needed. How much of a guaranteed return do you need/want in retirement? What is your risk tolerance after your paychecks stop? These are all questions that should be at the top of your list as you consider any type of investment vehicle.
Annuities can be integral to a comprehensive retirement plan. Don’t let misconceptions become missed opportunities. A solid retirement plan can often have several moving parts to keep up with your needs/wants as you age as well as inflation, medical needs, and a legacy for surviving spouses. Reach out to our team at Zara Financial Group and let us help you determine if an annuity is a suitable addition to your existing portfolio.

The information and opinions expressed herein are obtained from sources believed to be reliable; however, no representation is made as to, and no responsibility or liability is accepted for, the accuracy or completeness of the information. The information is provided as general information and is not intended to be specific financial guidance. The information is subject to change without notice. Before making financial decisions, you should consult a financial, legal or tax professional. Providing personal information may result in contact from an insurance agent. Unauthorized use is prohibited.
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