As you learn about annuities, you may come across some common annuity myths. At F&G, we value transparency, and we’re prepared to clarify the facts. Let’s take a look at those annuity myths and get some answers.
1. “Annuities carry hidden fees.”
Depending on the type of annuity you purchase (immediate, fixed or fixed indexed), your policy could have no charges. But some annuities do have surrender charges on withdrawals taken during your surrender charge period. Other plans may offer options to take a portion of their account value penalty-free.
Many fixed indexed annuities have additional fees with optional riders for guaranteed lifetime income, a specific growth rate, wealth transfer and even access to funds in the event of specific health needs. These features provide more benefits and can add more value to your policy.
2. “Annuities are complicated.”
Annuities with a guaranteed lifetime withdraw benefit work like Social Security or a pension. They can guarantee you a lifetime stream of income, subject to certain conditions and assuming no excess withdrawals are taken.
3. “Annuities are tied to the stock market, so I could lose my money.”
With a fixed indexed annuity, your money is not invested directly in the market. It’s linked to an index, so your account value will never be credited less than zero if that index decreases. Linking to an index provides the potential to earn interest, and your account value can grow if the index increases.
4. “If I buy an annuity, I don’t have access to my money.”
Many annuities allow for penalty-free withdrawals, though amounts in excess of the penalty-free amount may be subject to surrender charges.
Many F&G annuities include riders, at no additional charge, that provide penalty-free access to 100% of your money if you meet certain conditions in regards to terminal illness or nursing home or home health care. These liquidity features may vary by state. Talk with your financial or insurance professional about rider details and availability.
5. “When I die, the insurance company keeps my remaining money.”
As long as the annuity hasn't yet been annuitized, your full account value will be passed to your named beneficiaries. No surrender charges will be applied and your beneficiaries can usually avoid probate.
6. “I have to pay the financial professional out of my own pocket in order to buy an annuity.”
You are not required to pay the financial professional directly in order to buy an annuity. Your full premium is available to potentially earn interest from the annuity’s effective date. F&G products are only offered through financial professionals and licensed insurance producers, who are compensated through commissions which are not deducted from the premium paid for the policy. To find a licensed producer in your area, visit fglife.com.
