When making an important financial decision it is necessary to have at least one good reason to make the final purchase. An annuity may last for a few years or your whole lifetime, but if the purchasing decision is not a correct one, you ultimately will lose. However, there are many reasons to justify purchasing an annuity as part of your finance portfolio.
1) Guaranteed income for life
An annuity is designed to provide a lifetime income for the annuitants. This income is also assured on a fixed basis. Annuities are the only group of financial products on the market that provide a guaranteed lifetime income and survivor options.
2) Interest guarantees
The Annuity bears a guaranteed base accumulation rate in the accumulation phase. Fixed annuities also have guarantees on capital. This makes an annuity more than a low risk investment, since it provides a safety net for investors through regulation and statutory obligations.
3) Tax treatment
An annuity qualifies for tax treatment on contributions. However, you should not purchase an annuity solely for the purpose of special tax treatment.
4) Higher market rates
The annuity offers higher interest rates and rates of return when compared to alternatives in the same asset class. In some cases, the base guaranteed rates on annuities are just one or two percentage points off of the rates of return on Money Market Funds.
Annuities are the safest investment a person can make.