At some point in your life you probably have come across the term annuity. In general annuities have gotten a lot of press, both good and bad. What it really comes down to is, while investing in annuities may not be for everybody, they can be exactly what’s needed for certain investors.
Many who come into our office have associated annuities with being bad. But, when we ask them "why?", they don't really have a good answer. "I've just heard they are bad investments", is the typical response.
The first thing you must realize is that there are many different types of annuities: fixed, variable, immediate, equity indexed, which I will get into more detail below.
In general, annuities are products that are designed to provide a steady stream of income for a set period of time. Contract holders pay into an annuity to build up the account value, and then they have the ability to get a check either for life, or for a certain period of time depending on what the contract says.
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