Annuity Myths and Answers

Myth Question:What happens when you die? Do the insurance companies hold onto your money?
Answer:Income annuities can guarantee that you will continue to be paid as long as you live or as long as you specify. Life income annuity is guaranteed period that will continue until all of your money has been paid back. With this annuity, should you pass away, your beneficiaries are guaranteed to receive all your money when you die — everything you put in plus the interest you’ve earned.

Myth Question:I’m worried that guaranteed income annuities can’t keep up with inflation. Is this a right concern to have?
Answer:Not if you can keep your guaranteed income rising by converting additional savings into guaranteed income. Payout rates typically increase as you age. Your savings can and will buy an increasing income amount.

Myth Question: I’m interested in annuities, but I fear they are difficult to understand and own. Are they that complicated?
Answer:Some annuities are complex, but at MDH we keep annuities simple and straightforward. Here’s how they actually make your life easier:

  • Tax-deferred compounding for a guaranteed savings annuity can give you an easier income tax return and a lower tax bill.
  • Guaranteed income annuities take over the difficult process of creating your own income by instead offering a guaranteed retirement “pay-check.”

Myth Question:I always thought guaranteed savings annuities were only for older or extremely conservative investors? I’m younger, and I’m not necessarily conservative.
Answer:You’ve heard the expression before, and it applies here as well: “Age is but a number”. Savings annuities can diversify your retirement portfolio and help you plan for whatever your future holds years from now.

Myth Question: Once I buy an annuity, I won’t be able to move it without paying taxes. Correct?
Answer:The contrary is actually true. Federal tax regulations permits you to transition your annuity without paying taxes through IRA rollovers and 1035 exchanges.

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