Look Beyond Annuities If You Want To Progress On The Road To Safe And High Investments

By admin, February 26, 2013

Investment is the buzz word nowadays and with the volatility and the uncertain global situations, it would be a boon if investments would ensure that you get consistent income over life time, especially when you are nearing your retirement years. This is where financial institutions like Banks try and sell Annuities. Annuities are financial instruments which provide the benefit of interest accrual along with the benefit of deferred tax.

This means that while the investment accrues compound interest over the course of few decades, there is just a one time tax at the time of withdrawal. The biggest benefit is that the interest is accrued until an age of 80 years or even more, perhaps the longest amongst all other forms of investment.

In a usual process, a bank representative sells annuities of the insurance company which has tied up with the bank. Even though annuities are a safe bet, there are many cases where unsatisfied consumers choose to withdraw from the product which has made this perception rife “Don’t Bank on Annuities”.

Are annuities really not that good?

First and foremost, annuities are not bad and offer unbeatable features in some respects vis-à-vis other products. But, almost selling of any other financial product, there are some agents who abuse the product as they are offered high commissions for it.

Bank Annuities

Earlier, banks used to offer annuities to a customer who wanted a little more than a deposit account. Banks take licenses so that some of their employees can sell the products. Upon successful sale, the employee is rewarded either through bank’s incentive program or through commission.

This results in twin benefits to the bank. The bank is not only able to generate additional revenues but also simultaneously able to maintain its relationship with the customer. Earlier, annuities were offered as the default investment option to consumers, but with the changing trends and newer products, banks with insurance licenses in the modern day world can offer a variety of options to customers.

Question the intent

Unless you have an old and trustworthy relation with your bank, you must raise questions if someone is trying to sell you an annuity scheme. For instance, one can ask why annuities are recommended and not other financial products? You can also ask whether the person selling the scheme has the relevant expertise to give you adequate information or whether the person has the license to provide something other than an annuity. This will only help you in having a better understanding of what you are investing into.

When it comes to putting your faith in money matters, having clarity will help you in achieving financial goals.

An honest person will guide you by explaining both the pros and cons as well as any alternative strategy which maybe better than annuity scheme. What must be really emphasized is that a customer must be made to understand everything.

Conclusion

Annuities were one of the first products which featured into the savings cum investment category. But, some unscrupulous elements have started making investors believe not to bank on annuities. If you can do a bit of due diligence and follow some of the above mentioned guidelines, this can prove to be the safest investment when it comes to providing rich returns.

This post is contributed by Adam Anderson. He has been using payday loans as one of the fastest option to get rid of his financial crunches.