The Ultimate Guide To AnnuitiesYour One-Stop Resource for Retirement
What are its disadvantages?
Before owning an equity-indexed annuity you need to acknowledge that these are very complicated systems that will come in several forms, this complexity makes them difficult to understand and without fully understanding them will be harder to take advantage of their qualities.
Since equity-indexed annuities come in a wide variety of forms, is hard to determine how much of your returns you will receive. Different annuities of these kind have their own way to calculate your gains. Some equity-indexed annuities may set an annual cap while others may offer you just a portion of the overall return. Therefore, it’s important to understand how our payments will be calculated before buying one equity-indexed annuity.
Generally, this type of annuities comes with conditions that will imply fees, like surrender charges, for instance. Most of equity-indexed annuities have a surrender period of 15 – 20 years, where you won’t be able to fully dispose of your money without paying a surrender charge for a long time.