Annuities Continue To Be Popular
SmartMoney’s November 2009 issue contains Problems? What Problems? (titled online as Annuities: Should You Resist?), another entry in the ongoing discussion concerning annuities. In it, author Russell Pearlman reports that sales of fixed annuities, and especially of equity-indexed annuities, have soared in 2009. Readers will recall I previously wrote on this subject in A Post on Equity-Indexed Annuities, but some points are worth repeating here. While there is no question that fixed annuities can be a useful part of certain investors’ portfolios, it is important for prospective owners to understand how this product works. Investors should generally understand how the insurance company calculates the annuity’s interest rate, especially if the rate can be negative. Investors should also understand the annuity’s fees and charges as many issuers impose substantial surrender fees for withdrawing assets from the annuity before the surrender period has elapsed.
As always, investors are welcome to contact me with any questions about equity-indexed annuities or any other securities matter. (October 29, 2009)
