A better question is, did you lose money during the last economic downturn in 2008? The answer for most people is an emphatic “YES!”
Did you lose money during the downturn of 2000 – 2003? Again, the answer for most people is again, an emphatic “YES!”
Did you lose money during either downturn in your Fixed Index Annuity? And the answer for every single person who had money in Fixed Index Annuities is an emphatic “NO!”
Well, based on that answer, every person in the country should immediately run out and purchased a Fixed Index Annuity, right? The answer to that is also “No”.
Although Fixed Indexed Annuities are fabulous products and guarantee no loss of principle or interest earned, they are not for everyone. It is important to understand that most annuities impose surrender fees if you need access to your entire account balance. Insurance company annuities don’t prohibit you from accessing your money, but the insurance companies discourage access by imposing fees if you go beyond the traditional 10% free withdrawal provision. A good advisor will recommend that you maintain ample cash assets in other financial vehicles for immediate use. You should only allocate money to an annuity that you can afford to allow sit for an extended period of time.