What Is The Disadvantage Of A Fixed Annuity?

1. 

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   Jim Winkler

   CEO/Owner, Winkler Financial Group, Houston, Texas

   That is a great question! While a fixed annuity has a lot of great things going for it, there are a couple of things that you do need to look out for. The first is your liquidity. With any deferred annuity there is a period of time where the money you've set aside to fund it cannot be touched without incurring hefty fees, or damaging your earnings potential. If you suspect that you might need to access that cash at any point, then maybe an annuity might not be the right vehicle for you. The second involves the rate of return that you are promised off the annuity. Will the rate be enough after fees to outpace inflation and provide a return that is comparable to another investment vehicle? If not, then again this might not be the best investment vehicle. As far as safe investments go, fixed annuities are among the best, but please be sure to really think it over, and work with a trusted adviser before purchasing one. Please make sure that it ia a suitable vehicle for you. I hope that helps, thanks for asking!

   Answered on December 1, 2014

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2. 

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   David G. Pipes, CLU®, RICP®

   Business Development Officer, T.D. McNeil Insurance Services, Fresno, California

   A fixed annuity is a contract guaranteed by an insurance company. Insurance companies have failed although there are a lot of safety stops to preclude that. The benefit is contractual and is generally not adjusted by the cost of living. Your benefit could become less adequate with the passage of time. A fixed annuity may be currently paying one rate of interest, however the company is obligated to pay a lower rate of interest and that could become the situation.

   Answered on January 8, 2015

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