Safety of Investment



It should be understood that apart from providing a fixed return during the post-retirement phase of life, investing in annuities is also perhaps the safest form of investment. For starters, not every financial organization can issue an annuity. The financial regulations are such that credible organizations that have proven to survive in the long-term and have a history of paying dividends on a consistent basis are considered. Further, an annuity is essentially a type of insurance-insurance against the loss of wages due to reaching a certain, non-working age and hence, the entire handling of this investment option is overlooked by respective state governments.



When buying a fixed annuity, always avoid the risk of buying into an annuity plan that contains processing fees, contract fees or a sales load. This can be understood as annual maintenance charges that are charged without any substantial reason. These charges are deducted from the interest build-up for a fiscal year and mostly, the charges are for services that may be offered for free by other annuity brands. Secondly, always calculate and compare the Surrender Charge and the Surrender Period that is being quoted by various annuity companies. Most companies have a fixed time period that should have passed before an annuity can be surrendered. This is called the surrender period and it shouldn't be very long. This is because most surrenders are made within months of buying an annuity when a sudden, need for liquidity occurs. Similarly, every annuity-issuing company will charge surrender charges that is essentially deductions from the interest build-up or if the annuity was surrendered quickly, a deduction from the principal amount at the time of refunding the annuitant.