When Are Annuities Good?

  1. 220 POINTS
    Mike Carolus
    CEO, Insurance Resources, United States
    Annuities are good when a person wants to avoid risk of loss and desires a legally enforceable contract to receive principal and interest returns. Annuities are coveted when people deem it prudent to take distributions over time to making certain the income does not run out. The tax code allows advantaged distribution corridors based on established actuarial tables. The annuity owner can keep the option to direct funds to desired beneficiaries in most contracts.
    Answered on March 6, 2014
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  2. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    An annuity has a distinct advantage over other investments.  That advantage is its ability to provide a lifetime income guaranteed.  If that is the need, then an annuity is the only option.  The second advantage is the income tax treatment given to an annuity.  During the accumulation phase any gain on the policy regardless of its source is deferred until the annuity is surrendered or annuitized.  Annuities can incorporate a wide range of investments which will allow an investor to change investment strategies with the passage of time.  The biggest disadvantage to an annuity is that it is a long term program and capital is difficult to withdraw if needed in the early years of the contract.
    Answered on April 28, 2014
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