Where there is money linked, risks are associated with that too. There does not exist any investment that comes in risk-free. A fixed annuity is considered the safest annuity available among the several options in the market. The higher the returns the higher becomes the risk. No gain without any pain, if you want to see it that way. A fixed annuity has stable and easy returns and hence the lower risks. Yet the risks there may be vital for investors because the mark continuously changes its face. It’s all luck sometimes. It important to under the risks associated with the safest form of an annuity.
Fail in the payment
It may happen that the company you linked with and bought the annuity may go through a bankruptcy; it results to default in payment. A default is considered to happen when the authorized agency fails to pay the amount that the investor is supposed to be paid. In such a case, the result can be disastrous. You may lose a very large sum of money depending on the premium. The best way to get avoid this situation is to go to a reputed firm that has a stable background in the past.
Another big factor that needs to be mentioned in this article is inflation. On a long-term contract, you are most likely to be a victim of inflation. Inflation is the time when the prices of a product reduce considerably and take time to be back on what could be called a profit. What I mean is, you make a contract now over a long-term on a fixed interest rate say for a term of 20 years. In the present, the rate may see to be ok. However, after 20 years when you get the money with the assigned interest it may seem that you deserved more but the market has gone up.
This became an important drawback and hence many companies have come with another benefit called the Cost of Living Adjustment (COLA). Under this adjustment, the company will pay you according to the current inflation rates. This contract has to be bought separately to get the benefit.
Investing is the best option to get the big sum in a short time or to secure our future. All that is possible only when you are pay attention to all the information. No one is going to baby feed you. You have to look for your profit and your losses by yourself. You can take help of the internet to educate yourself to make an intelligent choice. Benjamin – Annuities is one of the destinations to make an intelligent choice out of the confusing option you have in front of you.