Can Annuities Lose Value?

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   David RacichPRO

   Fountain Hills, Arizona

   The short is…it depends on the annuity. There are basically three crediting methods used in deferred annuities: interest rate crediting, indice crediting and separate sub account crediting. Interest rates are generated by the company’s predominately government bond portfolio. Most indexed annuities invest their interest rate returns in domestic and foreign index options. Some indexed annuities that credit zero in a given year, still charge policy expenses and which could result in a loss. Variable annuities use equity and bond instruments in their separate sub accounts selected by the variable annuity owner. These separate sub account allocations are subject to market risk, i.e. you can lose money.
    
   

   Answered on July 22, 2013

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