Indexed Annuities Aren’t What They’re Cracked Up To Be

Here’s an excellent article posted today in Investment News. 

With the recent bear market and incredible market turmoil, the emergence of “silver bullet” investment solutions has been rampant. Indexed annuities are perhaps the biggest culprit.

Indexed annuities are often misunderstood

Insurance products like indexed annuities aren’t all they’re cracked up to be!

Indexed annuities, as with most variable annuity products, are sold – NOT bought. Meaning that rarely do financial consumers go looking for an index annuity or variable annuity. Rather they’re sold by excellent salespeople who may not themselves know the intricacies of how they work.

While there certainly are some cases where an index annuity may be appropriate, I would argue that those situations are few and far between.

Index based CD’s and other structured notes and investment products fall into the same category as indexed annuities. Most are highly opaque, few work well, and nearly all are laden with heavy fees and hidden commissions.

They all sound GREAT on the surface however! Promises of guaranteed stock market returns without any risk. These salespeople must think you were born yesterday… Dig deeper and the troubles with their structure start to pop up.

If you’re at all considering an index based annuity or indexed CD product, read the linked article – it’s eye opening.