Annuities: The Epitome of Bad Investments
Well-known money manager Ken Fisher recently said with his trademark feistiness, “I hate annuities… and so should you.” He’s not just being cantankerous. His advice is really on the mark here: annuities may seem like attractive investments but, in reality, they’re warmed-over insurance products with a little window dressing.
In the financial world, in Santa Clara and beyond, there’s always a lot in the details of what Ken Fisher has to say. His take on annuities is no exception. Annuities are contracts where you pay someone today to pay you back some day in the future. Your money may or may not grow in the interim. And whether it does or not, one thing is certain – you can’t get your money out unless you pay a very hefty penalty. And actually another thing is certain – the insurance carrier’s fees will be incurred whether your funds grow or not.
Annuities historically were sold to give individuals peace of mind in retirement years; they could rely on a set, periodic annuity payment for the remainder of their life (or a term of years at least). Often there was an upfront tax advantage; premiums could be paid with pre-tax dollars (for qualified plans) or a charitable deduction might be available if a charity received a part of the pie. In any event, the main impulse was certainty: when you’re beyond income-producing years a guaranteed annuity seemed like the safest bet. But in fact, annuities are truly very complex products, andthey may never produce the promised returns after market fluctuation and adjustments, commissions, fees, withdrawal penalties, and liquidation charges. If you’re considering purchasing an annuity, be very, very certain that you understand all the downside.
Finally, whatever you do, don’t be fooled by these over-glorified products as Ken Fisher advises. Take the time to look through the details of the policies and never be afraid to ask for a second opinion from a professional who doesn’t have anything to gain by your purchase. Read everything, study the company, do a search, take your time, think about your future income needs. All these things are important. What’s often said to young people by their seniors is equally true when you’re considering annuities: you have your whole life ahead of you.
Some of the major annuity and life insurance providers in California are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
Evans Law Firm, Inc. handles annuity fraud and insurance fraud cases and lawsuits in Alameda, CA and in all other counties in California as well. If you have purchased an annuity policy, or are considering purchasing one, and would like to know whether it is a suitable investment for you, contact Evans Law Firm, Inc. at 415-441-8669 or via email at firstname.lastname@example.org.