Safety and Preservation of Capital When Investing
Before buying annuities you need to ask the question- are annuities safe investments? Before you can answer that question properly it is necessary to be well aware of the kind of annuity you are wondering about. Variable annuities fluctuate with the rise and fall of the stock market whereas fixed annuities do not. Immediate annuities come with a set of predetermined terms but that does not guarantee that they are any safer than the other types. Fixed annuities may sound safe but often lack security based on the insurance company you purchase them from.
When you ponder the question- are annuities safe investments? – you have to realize that “safe” is a relative term. It can mean all different kinds of things. You have to know in what context you are asking if an annuity is safe? Do you mean how safe it is in the economy if a recession were to take place? Do you mean how safe it is to market insurance? What do you mean?
Many things must be taken into consideration when you are trying to determine the safety of an annuity and if it is in your best interests to purchase one. While the annuity agent you deal with may tell you that an annuity is safe there are many factors that you must consider yourself. The ratings of an insurance company are a good place to start but you must determine the quality of the insurance company based on other factors as well. The type of annuity investment makes a difference, as does the quality of the investment and in particular what your financial goals are. For example, if losing money would be disastrous to you then a variable annuity is not a safe investment for you.
Annuities are regulated by the individual states and therefore they vary from one state to another. The primary aims connected to any investment are to provide security, tax benefits and good returns. Sometimes to ensure the safest of investment you will have to accept lesser returns. While this is acceptable to some investors, it is not to others. Only you can decide whether the safety of an annuity is the most important consideration or not for you.
Are annuities safe investments? Often this is dependent upon the specific insurance provider. Some have been in business longer than others and have developed solid reputations. In most cases if the insurance company is solvent then your annuity investments should be as safe as possible. Due to state requirements and regulations this means that your annuities are even safer