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Five Common Annuity Misconceptions

Mark Goldfinger

More misconceptions and myths swirl around annuities than any other financial product. Some of the confusion may be due to the fact that annuities have greatly improved over the past 10 years, offering more options and benefits than ever before.

One of the most flexible types of annuities is a fixed indexed annuity (FIA). An FIA is a financial product sold by insurance companies. The insurance company guarantees to protect your principal and give you the potential for growth linked to an index, such as the S&P 500. With an FIA, you can choose to receive guaranteed lifetime income!

It’s important to understand the facts as it relates to five common annuity misconceptions:

Misconception #1: Retirement accounts don’t need an annuity

The Facts: Two of the essential benefits and features of FIAs is the guarantee that you will never lose your principal, and when you begin to take income, you will never run out of money. 401(k)s and IRAs do NOT provide any asset protection from stock market losses, nor will they provide guaranteed lifetime income streams.

Misconception #2: Annuities charge high annual fees

The Facts: With an FIA, the only time you may be charged a fee is when you choose to add an optional policy rider. For instance, if you choose an income rider, which guarantees to pay lifetime income, some annuities (though not all) may charge a low fee in exchange for this benefit.

Misconception #3: Annuities are too complex for the average person

The Facts: An annuity is simply a contract with an insurance company to get financial benefits in the future. When you purchase a fixed indexed annuity, you set aside a portion of your savings in return for a guarantee of your principal, with an option for a future stream of guaranteed lifetime income.

Misconception #4: You lose your annuity account balance when you pass away

The Facts: Fixed indexed annuities allow you to pass your account balance to your named beneficiaries after you pass away. You may choose to set up your annuity as “joint life” in order to provide you and your spouse guaranteed lifetime income, no matter how long each of you may live.

Misconception #5: Annuities are only for older investors

The Facts: No matter your current age, an annuity can be a smart way to diversify your portfolio. A fixed indexed annuity provides balance and stability. The No. 1 fear among today’s seniors is “running out of money, before running out of time.” FIAs provide a dependable stream of guaranteed lifetime income to depend on as you age.

Today’s FIAs offer a range of features and benefits that protect your savings from any and all market loss, provide guaranteed lifetime income, and allow you to provide the remaining assets in your account to your designated beneficiaries.

About the Author:

Mark Goldfinger graduated from Bernard Baruch College in NYC with a double major in finance and marketing, and earned his MBA from St. Johns University.   In 1990, he moved to Southern California, where he has been providing comprehensive financial services for his growing list of satisfied clients.

To contact him, call (310) 770-5944 or email Visit to learn more about Mark and his practice.


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