Why consider an annuity?
January 22, 2012 by Scott Lunsford
Jan. 22, 2012 |
Written by
Scott Lunsford
Are you frustrated with the interest rate your bank is paying you? Can’t quite handle the twists and turns of the stock market?
Are you interested in an investment that is paying 3.25 percent and is guaranteed never to pay less than 2 percent? Would access to 10 percent of your balance each year be important to you? Would you like your money to bypass probate when you die?
Maybe you should consider an annuity.
Many people think annuities are complicated. Some annuities are, but this column is going to address a fixed annuity.
A fixed annuity is no more complicated than your bank certificate of deposit. A CD and an annuity are savings plans. A CD is bought at your bank, and an annuity is bought from an insurance company.
Annuities, however, are tax-deferred, offer competitive interest, have lifetime guarantees, offer 10 percent withdrawals from your account without a penalty, offer a lifetime monthly income and offer more flexibility.
Many people shy away from annuities because they have a reluctance to invest money with an insurance company because the banks feel “safer.” Let me ask you a question: If a tornado swept through town and destroyed your home and car, how would those items be replaced? By your insurance company, right?
So, if you’re like most people, your home and car are your most valuable possessions. You trust the insurance company to be there in your time of need. If you trust the insurance company to replace or repair your possessions, doesn’t it make sense that the insurance company can take care of your money as well?
I never have seen interest rates at banks lower than they are now. The stock market is unpredictable at best.
I would argue that never has there been a better time to consider an annuity.
Lunsford is owner of Lunsford Insurance in Chillicothe.
