Not surprisingly commission based salesmen have favored the annuity indexed investment funds over all others because of their commission value, not the return they provide the consumer. The presentation of the indexed based annuity gets the most practice because it pays them the most, not because it’s the best for you. A lot of people are fooled into the pitch thinking the returns will be almost guaranteed because they are based on the index. What most people feel mislead about is the actual place the returns are based on.
If you are getting confused do not be, we are going to take a look at a few basic facts about indexed based annuities. Equity indexed annuities fail to include the dividend gains. The dividend earnings have made up almost half of all the common stock earnings in the last fifty years. The gains you would have made in the stock earnings are actually capped, preventing you from gaining as much as you would otherwise.
Equity based annuities are by far and away the most heavily penalized when it comes to taking your money out before the predetermined maturity date. Money is therefore taken out of your pocket and withheld by the insurance company so they can meet their own margins.
Any time you are making a purchase based on commission sales it is important to know if there are different commission percentages for different products as this will often times affect what you are being sold, this is the case for equity indexed annuities.
While four or five percent are normal commissions these annuities offer the salesmen in excess of ten percent. When you know the normal commission rate is five percent and you are being charged ten, you know something is up. The sales guys are so adamant about selling these because they are what is in their best interest not yours. You bottom line could really see some improvement in these investment types if so much of it weren’t going to the salesmen.
Al lot of people fell they were done wrong by their annuity provider and wonder why they were sold such a shoddy investment. If you type ‘class action lawsuit’ and ‘equity based annuity’ into google you will find enough results to see a clear picture of the way these investments always seem to pan out. I would rather purchase structured settlement than have to deal with all the smoke and mirrors of an equity based annuity.
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