"An annuity is a contract you sign with an insurance company that could guarantee you income for the rest of your life. Ramsey says an annuity is a lot like ordering a burrito at Chipotle because these products can be customized to meet your personal needs. With an annuity, you can decide: How you want to pay for your annuity, whether it's a single payment or multiple payments When you start receiving annuity payments Whether you want your payments to be fixed/predictable each month or variable"
"First, he warns of hefty surrender charges, which come into play if you take money out of your annuity within a few years of buying it or try to cancel your contract. Secondly, one of the reasons insurance companies love selling annuities is because they can charge expensive fees. Plus, the individual people who sell these products tend to make big commissions off of them - commissions you pay for."
An annuity is a contract with an insurance company that can guarantee income for life and can be customized to individual needs. Buyers can choose single or multiple premium payments, the timing of when payouts begin, and whether payments are fixed or variable. Annuities provide the benefit of guaranteed lifetime income. Major drawbacks include hefty surrender charges for early withdrawals or contract cancellations, high fees charged by insurers, and large commissions paid to sellers. Ongoing investment and management costs can significantly reduce net returns compared with other retirement strategies.
Read at 24/7 Wall St.
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