The Problem with Annuities

The uncertainty of the stock market and the Fed lowering interest rates to combat the mortgage foreclosure problem many people are looking at annuities as an alternative. Is an annuity right for you? Annuities are sold by insurance companies as an alternative investment that often ensures a set return on your money, but there are disadvantages. Here are some important issues to consider before you invest. Sales commissions are paid out of your pocket, so ask how much they will be. There are often delays when requesting a payout, so if you are in a hurry to withdraw funds you may be out of luck. How long do you have to keep the annuity and can you cash in at any time? Many annuities charge a surrender fee when you cash in the annuity. How does the real rate of return compare with other investment products? Make sure and read the disclosures!