What is an Annuity?

There are a lot of opinions, both good and bad, about what is an annuity. They are often one of the more misunderstood investments. No financial product is universally good or bad for all people, annuities are no different. However, they do fill a void for those seeking a safe place to save money.

There are generally three types of annuities:

  1. Fixed Annuities – type of annuity that pays a fixed, guaranteed rate of interest for an initial part of the accumulation period.
  2. Variable Annuities – type of annuity whose credited return varies according to the investment performance of a portfolio selected by the holder.
  3. Indexed Annuities – type of annuity whose credited interest rate is tied to an index economic performance.

Principal protection has and will always be the primary goal at Wayne Messmer & Associates. In dealing with some of our more risk-averse clients, the index annuity has been a tool we have used to limit the downside returns from market risk while still participating in the upside.

An unbiased study was done by the Wharton Financial Institutions Center at the University of Pennsylvania. You can view the study in its entirety here. In short what they found was, “Indexed Annuities have been producing returns since the first one was purchased on February 15, 1995.  Unfortunately, most of the articles and studies ignore this data and attempt to portray how Indexed Annuities should have performed while ignoring actual results.”

Prospectuses, literature and informational materials are available upon request.

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Annuity guarantees rely on financial strength and claims-paying ability of issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by carrier. Annuities are not FDIC insured.