Annuity sales people often compare the benefits of their product with the investing risks that attend stocks and bonds. They mention all the hazards of securities markets and possibilities of market loss. But annuity salesmen often overlook the downside of what they offer.
Annuities do have negatives. They are not for everyone. They have an insurance factor which may not be needed. And if not required, why pay for it?
There are annuity management fees, contrary to some sales pitches and also early termination charges. The strength of the company is always important to consider.
Then there are fixed or variable annuities to select that further complicate the picture. Fixed annuities have set returns which means the buyer has no protection from any future inflation. Variable annuities tie into securities markets but not as directly as you may want.
So be alert to annuity sales patter, as much as you ought to be when it comes to securities considerations.
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