Most people don't know that an annuity is a life insurance policy issued by an insurance company. The salesperson who sells you an annuity makes about 10 percent of the sales price in commission. If you have an annuity, you have no direct ownership in any investment products. No stocks, bonds, or cash. All you have is a contract with an insurance company where they promise to pay you money in the future. If they go broke, you don't get any money back. This is very different from a mutual fund where you have ownership in the investment products held in the fund. I don't like annuities because they have high management fees, and they are very difficult to get out of without paying additional fees. Also, the salesperson will not give you a copy of the complete annuity contract to read in advance of purchasing it. And, most salespeople will not even tell you that you are buying a life insurance policy. That should tell you something about their product. You can achieve better results by holding a diversified portfolio of stocks, bonds and cash.
|