Variable Annuity Pros And Cons

A variable rate annuity has some similarities to a fixed rate annuity in that you are placing your money into the annuity with the intention of being paid back at a later date usually after you retire.

Variable annuity pros and cons. Long-term care insurance pays for home health care or nursing home care if you become seriously ill. All financial tools have various pros and cons. Payments from variable annuities can increase if the portfolio performs well and decrease if it loses money.

Where there are pros there are often cons too. Variable annuities are also. This makes indexed and variable annuities familiar sales promise of market-like returns a bit harder to swallow.

Variable annuities can charge high fees. In addition variable annuities allow the customer to choose between a group of well-known mutual funds to finance the capital of the annuity. If you are purchasing an annuity with high fees there had better be compelling reasons to do so.

But many of the downs that can come with variable annuities may not affect you. Here are some additional variable annuity pros and cons to think about as well. A variable annuity like ALL other annuities offer a guaranteed payment of income for the life of the annuitant who may be different from the contract owner.

Plenty of products allow an investor to elect out of the options but some dont. These factors mean each distribution from the annuity has less and less purchasing power. Variable annuity has huge compound interest effect.

The disadvantages of annuities depend on the type of annuity. Investors are in love with variable annuities which pack a nice tax benefit. These fees are similar to what you would pay if you invested.