Q:

How do you understand annuities and make a safe investment?

A:

Quick Answer

There are two ways to make a safe choice when investing into an annuity: Learn about them from a trusted source such as the U.S. Securities and Exchange Commission, or take advantage of an expert's advice. Though easier, the latter may be subject to a fee or commission.

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Full Answer

Annuities are sold by financial institutions and benefit investors by giving them a guaranteed income over a period of time established in a contract. Individuals can purchase annuities with a lump sum investment or through a series of payments.

Annuities are generally purchased to fund or supplement retirement income. Some annuities offer lifetime benefits, and just as life insurance is a financial safeguard for an early death, annuities can be considered financial protection for a longer life.

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