A. There are many different types of annuity products, I think most are not suitable for most people. However, if you want to consider one and only one annuity, it must be fixed annuity. Here is why.
We carry insurance on most of our major assets - car (auto insurance), home (home insurance), human capital (life insurance). But what's one's most important and biggest asset? Retirement fund.
Think Fixed Index Annuity as an insurance on your retirement asset.
With Fixed Index Annuity, the key benefits are:
- There is no down side risk, the insurance company guarantees your investment.
- At the same time, you are still able to share in the market growth
Like everything in the world, when you gain something, you lose something. With the benefits, your market participation comes with certain limits.
However, I think every retiree needs a FIA type of protection, because the closer you are to retirement, the less you can afford to take a hit by any surprises. Just think about the people who are still working due to the market set backs in 2008!
There are many FIAs, not all are created equal; and there are many questions to be answered to decide when, how much, what annuity to buy. I will share learning of FIAs in more future blog posts.