Annuities are safe, secure and without risk…. hmm, well not exactly. As Annuity Guys® we expound quite a bit on the safety virtues of MarketFree® Annuities, however, in the interest of being fair and balanced we have to tell you that different annuities have varying degrees of risk even if some have very little risk.
Here are our Top 5 Annuity Safety Risks:
- Market Risk to Principal;
- Risk to Growth;
- Principal Fees or Penalties;
- Over Funding;
- Failed Insurance Companies.
Watch as the Annuity Guys® go further in depth on the Top Five safety risks of annuities in this weeks video.
Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
Check out this article that reflects on the general safety of “safe money options”.
All Investments Have Risk – Even Safe Ones
By Dana Anspach
All investments have risk, even safe ones. You are exposed to three types of risk with safe investments:
- Potential to lose principal.
- Loss of purchasing power due to inflation.
- Illiquidity – paying a penalty to get to your money.
1. Potential to Lose Principal with a Safe Investment
Although unlikely, on occasion people do lose money in safe investments. How? The questions and answers below offer an explanation.
- What happens to my deposits if my bank goes under?
Your deposits in the bank are covered by FDIC insurance. There is a limit to how much is covered. Typically the first $100,000 per account, per institution is insured.
As of October 2008, there is temporary increase in the FDIC coverage limits to $250,000.
If you have funds in excess of the coverage limits, there are two ways to get additional coverage:
- Work with your banker to create multiple account titles, such as one account titled in the wife’s name, one in the husband’s name, one that is jointly titled, etc.
- Spread your funds across multiple institutions. Some banks will even do this for you by participating in a program that will allow them to place your money in certificates of deposit with other banks.
- How safe is the money in my money market fund?
Money market funds own short term investments; some of these investments, called commercial paper, are very short term loans between companies. They are considered safe because the chance that a company will go out of business in the 30-120 days before the loan comes due is very small.
In September of 2008, the safety of these fun [Read More at About.com…]
Using OutCome Based Planning™ for Your Retirement
"The Annuity Guys will never call you unless you request our assistance". When you are ready for specialized help we will be available to assist you.. We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio with annuities so you can meet your retirement objectives by "first identifying the least amount of your investments or savings that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"
This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.
When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is an independent, licensed insurance agent and (also a securities licensed fiduciary financial planner) who has access to many different companies and annuities in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on us.
Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as an Annuity Guy's vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.