An annuity is a contract with an insurance company that pays out regular monthly payments, guaranteed for life, in exchange for a lump-sum of money paid upfront. Annuities can solve one of the biggest problems that many retirees fear, and that’s running out of money in retirement. But because these products can be somewhat complex, and are often associated with fees and surrender periods, many myths and controversies surround them.
Here’s a look at some of the more common myths about annuities, according to a recent Newsday article.
Myth: If I die young, the insurance company keeps my money.
Truth: If you purchase a “single life only” annuity and pass away shortly after your payments begin, yes, the payments will cease, according to Dan Keady, senior director of advice and planning at TIAA in Charlotte. But almost all annuities offer an option for guaranteed period of payment, meaning you or your heirs receive payments for a predetermined number of years, regardless of your “living status.”
Myth: Annuities are only for older investors.
Truth: An annuity can be a smart way to diversify your portfolio regardless of your current age. A fixed-income annuity can provide a dependable stream of guaranteed lifetime income.
Myth: Variable annuities have high and hidden fees.
Truth: “Annuity fees vary based on company and type. You can find lower-cost annuities with features that suit your needs,” Keady added. The key is to read the annuity’s prospectus before signing on the dotted line, and be sure you understand exactly what it is that you are buying.
Myth: I can withdraw money from my retirement accounts, so I don’t need an annuity.
Truth: You can.....
( Read More: http://www.annuityfyi.com/blog/2017/03/annuity-myth-busting/ )
Written by Rachel Summit