If You’re Considering an Annuity, Start by Understanding What You Get
March 12, 2019 by Kevin McAllister
You’ve probably seen the commercials advertising annuities, but as common as the ads are, details about exactly what you get from buying one are scarce.
So what can purchasing an annuity actually do for you?
Often mislabeled or misunderstood as an investment, an annuity is a product designed by insurance companies to hedge against the chance you’ll outlive your retirement savings. Annuities, at their core, aren’t generally used as wealth-creation tools; rather, they are risk-management mechanisms.
Though there’s variety among the types offered, the common thread is the contractual element: You give some or all of your retirement savings to an insurance company and get a check each month in return. Guaranteed income is typically the selling point of any annuity, as most policies will continue to pay you until you are no longer around to sign the checks.