What are some recommendations for annuities?


Quick Answer

Recommendations for annuities include identifying and understanding the different types of annuities, as well as accrued benefits and risks, explains AARP. A person who intends to buy an annuity should know the use of the annuity, all costs associated with the annuity and waivers available in case of an emergency, notes Investopedia.

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Full Answer

An immediate fixed annuity guarantees monthly fixed payments, while an immediate variable annuity pays monthly fixed percentage of the variable portfolio's value, notes AARP. An inflation-linked annuity is an annual payment to a person after inflation is taken into consideration. If a person wishes to earn a big first-time initial package, he may choose the fixed annuity. The variable annuity suits a person who can handle variable payments, while the inflation-linked annuity works out for an individual who intends to maintain his purchasing power.

The insurer may levy yearly or upstream charges in addition to the initial costs, according to Investopedia. Surrender fees refer to the amount the person pays in case he withdraws his money earlier. As with initial charges, surrender fees vary among insurance companies.

A fixed annuity guarantees regular incomes, which suits a person who is retired or about to retire, explains Investopedia. An individual who plans to leave the annuity to beneficiaries can go for the variable annuity that comes along with death benefits. However, the individual should consider the types of death benefits available.

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