Why Are Fixed Index Annuities Bad?

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    David RacichPRO
    Fountain Hills, Arizona
    The history of fixed annuity rates generally outperform bank certificates of deposit and unlike certificates of deposits, accumulate tax deferred. Tax deferred annuities are for conservative investors looking for better crediting interest rates and/or have high tax brackets. Others like the option at distributions to take lifetime income you can't outlive.
    Answered on July 21, 2013
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    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    They aren’t.  A fixed annuity is merely a plan that has been developed.  It might be perfect for your situation or might not fit at all.  There isn’t any investment risk in a fixed annuity.  That suits many.  There is an inflation risk which could concern some; however, that hasn’t been a big issue recently.  The benefit is that the earnings of the annuity are tax deferred which allows them to grow faster than if you were paying taxes on the earnings.   Ultimately, they can provide you with a guaranteed income that you cannot outlive.
    Answered on May 19, 2014
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