Annuity salesmen often compare the benefits of their product with investing risks of stocks and bonds. They mention 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 required. And if not required, why pay for it?
Then there are annuity management fees, contrary to some sales pitches and early termination charges. Moreover, the strength of the company is always important to consider.
The choice of fixed or variable annuities further complicates 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.
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