Anyone familiar with "single premium deferred insurance annuities"?

[BC]

I am getting ready to retire and can not decide what to do with my pension money & savings. I am looking at a fixed rate insurance annuity that looks very good, but wonder what the drawbacks are? There is NO fee with this one & you lock in for 3 , 5 or 7 years. Anyone out there in the insurance business that could help?

 

[DisneyWalker44]

I am getting ready to retire and can not decide what to do with my pension money & savings. I am looking at a fixed rate insurance annuity that looks very good, but wonder what the drawbacks are? There is NO fee with this one & you lock in for 3 , 5 or 7 years. Anyone out there in the insurance business that could help?

Note - I work for a company that sells these, so assume I'm biased as heck here. In general, it's a really good product. I'm sure your agent/adviser explained the pros, so no need for me to cover those. There aren't a lot of drawbacks, but here are a few to think about

1) You are locking your money in for a period of time. If you need the money - and it doesn't meet one of the loopholes built into the policy - you'll have to pay a fee to get it.

2) Insurance companies are about the most stable financial companies around, but there are still some duds out there. Make sure you are buying from a reputable company.

3) The tax treatment of annuities is generally very favorable. But the laws are tricky. Make sure your agent knows what they are doing.

4) If your money is in the annuity, it's not somewhere else. Be sure the annuity is the appropriate vehicle for you. What are you trying to accomplish? What are you goals? Is the annuity the best vehicle to meet those goals?

#4 is the real key. While a fixed rate annuity is usually a nice safe choice that isn't going to be bad for you, it's not always the best choice.

 

[BC]

Why do you say it's not the best choice? My husband is also retired and has been for 15 yrs. He has done well in a fee based account, but we wanted one of our retirement funds to be safe, therefore that is why I am looking into this fixed rate annuity. I know there are some variable annuities, but I do not want to take the chance of losing my money, so I am wanting the fixed. The company is Erie Insurance. Any thoughts? My biggest concern is the death benefit. I understand the benficiary will get exactly what I would when I surrender the account.

 

[DutchsMommy]

I think he meant: be aware it is locked into the annuity at the terms and rate you have selected - as opposed to being available to take that trip to Fiji By the sounds of it, you have considered this situation as this is not all of your retirement funds (given the details provided re: hubby) so likely #4 has been taken care of.