Are Annuities A Risky Investment?

Shawn Plummer

CEO, The Annuity Expert

Understanding the Risk Level of Different Types of Annuities

Fixed Annuities and Fixed Indexed Annuities

  • Risk Level: Low
  • Key Feature: Principal protection
  • Cancellation Flexibility: Generally, you can cancel, but often with surrender charges, especially within the initial years.
  • Why Low Risk?: Your money grows at a guaranteed rate, protecting you from market downturns.

Variable Annuities

  • Risk Level: Higher
  • Key Feature: Investment in sub-accounts similar to mutual funds
  • Potential for Loss: Yes, based on market performance
  • Why Higher Risk?: Your returns depend on the performance of the investments chosen, making it subject to market volatility.

Immediate Annuities

  • Risk Level: Low in terms of investment risk but high in terms of liquidity
  • Key Feature: Immediate, regular income payments
  • Cancellation Flexibility: Very limited to no option to cancel
  • Consideration: Once you commit, you generally can’t get the lump sum back.

Conclusion

Fixed and fixed indexed annuities are low-risk as they offer principal protection and some flexibility in cancellation, albeit often with fees. Variable annuities carry higher risk due to exposure to market fluctuations. Immediate annuities, while providing a stable income, are inflexible in terms of cancellation. Always assess your financial goals and risk tolerance before investing. Contact us today for a free quote.

Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

Scroll to Top