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Annuities: Why Annuitize?

By Compuquotes Team on March 27th, 2008
Annuity

Some people ask why they have to annuitize in the first place considering they would not want their future finances to be that complicated. Some will say that is rightfully so, what with annuities being some of the more sophisticated financial vehicles out there available to investors. A lot of options for annuities abound, and different policies are available for different needs and situations.

Others will say annuities provide them with maximized and guaranteed income for the rest of their lifetimes. With that guarantee, they say they are more in control of their finances, their purchases, their donations, now more than ever. Annuities are said to offer benefits even to heirs of the principals. The tax deferment add-on is another reason why people choose to annuitize. Also, annuities are practically maintenance-free and simple to implement once terms are finalized at the onset. Then again, should you incur debts, annuity incomes are excluded from creditor claims.

So why else would you annuitize?

Even before comparing annuities to other financial vehicles, look to yourself first. What are your retirement objectives and are you presently capable to reach those objectives with your present resources? Take a look at your employer's plans and determine if what they offer will provide the answer to your retirement objectives. See also if pensions through social security or government service security will be enough to tide you over in old age. While these pensions grow in amount regularly, they don't grow as quickly as inflation erodes the value and purchasing power of your money. As inflation erodes that purchasing power, you would be surprised later that your savings are no longer worth their amount in buying your most basic necessities.

Why go for annuities?

Annuities need not be complicated. Choosing them over other financial investment vehicles need not be a painful decision. Why should you go for annuities? Why should you annuitize? Why not, as annuities are especially designed as alternatives in the long run compared to mutual funds or other traditional vehicles. With an annuity, you are assured of monthly income when you retire for as long as you are alive. That's simply income for life that annuities guarantee.

Annuities are more often than not offered by investment and insurance companies of proven worth and track record in the business. This is because annuities as investment vehicles need to be handled by experts. Guaranteed results are assured through sound investment decisions that these companies take with your money. The track record and performance of your annuity provider should speak for the stability and reliability of the provider.

But before going full-blast���

Check the company completely. Find out about fund fees. See what options are available to you. Check if there are several fund models or plans and choose the one that will answer your every requirement. Find out who manages the funds and where they are invested. Validate the track records of the investing officers, too, if at all possible. For all these efforts, you need to be comfortable and convinced enough before you let go of the money for the annuity.

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