Why Do People Buy and Like Annuities: to Reduce Their Worry
Annuity = Stability
Which kind of companies would own a forest?
Insurance companies.
Forests are high-yielding but long-term investments. That's how life insurance companies manage the long-term financial promises they make to people.
Life insurance companies make annuities. You use an annuity to reduce your risk: to create a more secure income and to help preserve your wealth.
There are Many Ways to Use Annuities
For Income Stability
Retiring? You probably don't want your income dependent on Wall Street.
Rather, you need reliable income that's out of the market--so you don't have to worry how you'll pay for next month's bills. A short (or long term with COLAs) annuity often does that job well.
To Grow Your Income With Market Downside Buffers
There are many options today to get the upside you need but preserve your wealth against the downside you don't want. These annuities are very popular as CD alternatives. Higher rates of return and some liquidity make them a more attractive option than the rigid CD.
As Two-in-One Annuities
Some annuities can do more than one thing.
They can provide a reliable stream of income.
Or be designed for lower-risk asset growth.
Or provide funds for long term care.
Or provide a death benefit.
Or can help you transfer wealth tax-efficiently.
Or can help spread out your tax liability.
One financial package doing multiple strategies.