Why Annuities?

Author: Verlin Taylor

In the current economic times, many individuals are concerned about the safety of their retirement. 401-K, SEP-IRA, Roth-IRA and other retirement account holders experienced losses in the past several months. Annuities provide a complementary retirement vehicle that can preserve original premium payments while reducing the risk of loss.

Annuities can be another component of a long term retirement plan. The safety of the product, bonus interest credits and flexibility of the product are key features that make annuities attractive. Also, the product is protected by each state's Guaranty Fund for company insolvency. Insurers pay into this fund to protect account holders from companies who become financially unstable or insolvent.

AM Best ratings are available for consumers free of charge. These ratings provide up to date information about the financial position of insurers. When curious about an agent's insurer, consumers should refer to rating details available at AmBest.com. Insurers are rated as secure, A++ through B+ or vulnerable, B through F. An understanding of these ratings prevents consumers from purchasing annuities from insurers who are financially unstable.

Equity-indexed and fixed annuities offer benefits and flexibility for risk adverse consumers. Both products offer guarantee interest credits on fixed accounts. Some insurers offer bonus interest credits during the first year or first five years of the contract. Equity-index (EI) annuities enable annuitants to participate in earning higher interest credits. This is possible by changes in the S&P 500 or Dow Jones over a year. However, unlike mutual funds or stocks, a reduction in the index does not result in a reduction of the annuitant's original premium payment.

When considering why annuities for a retirement plan, consumers should consider the safety, protection of original premium payment and earning potential of the product.

I have over 14 years of experience providing life and annuities products for residents of the state of Texas. Currently, I specialize in providing annuities products from a host of highly rated insurers with A.M. Best. My professional profile is available at http://www.linkedin.com/in/vktaylor

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