What Is An Annuity?

What is an annuity?

An annuity is an insurance product and there are a few different types that exist. An annuity can be used to accumulate tax deferred funds to create a lifetime income in retirement.

Different types of annuities include fixed, variable, and fixed index annuities, or FIAs. A fixed annuity protects your money and it comes with a fixed interest rate. Typically, the rate is lower than what you could receive from another type of annuity. A variable annuity could get a higher rate but also carries higher risk because its rate is determined by the stock market. A FIA doesn’t have this problem: it offers both protection of principal from market declines and reasonable rates of return.**

Could An Annuity Be

Right For You?

Should you consider an annuity for retirement? To discover what options are right for you, contact Dotson Financial. We believe FIA could act as an integral part of your financial retirement strategy.

Myths About Annuities

There are lots of misconceptions about annuities and some agents might tell you annuities are bad. Why is this? Some of the more common reasons could include they're expensive or the insurance company will keep your money if you pass away. With our help, you will see these myths are not true.

FIAs

However, in general, FIAs are a good option in terms of the reliability and safety they provide. A FIA is linked to an underlying index. This allows for reasonable rates of return** but since it doesn't invest directly in the stock market, your principal may be protected from market declines.

Annuity Benefits

Additionally, a FIA may offer the option to leave money to your beneficiaries. A good FIA could allow you to gain increased income as the cost of living rises and being an insurance product, it comes with different tax rules than traditional retirement accounts. What exactly does this mean? Contact us to learn more.