Are Annuity Insurance Plans Worthy Enough to Buy?

Retirement annuity insurance plans are made to help you spend your life after retirement in an easy and comfortable way. Under these plans, you pay a monthly premium and receive a consistent monthly income after your retirement.

But you must know the worth of annuity insurance before you buy it. Let’s go through an honest analysis to decide on the same.

Positives About Annuities

Annuity insurance plans have some really good perks that make your life after retirement really easy and comfortable one. These perks enable you to receive an amount after a fixed interval of time and utilize the same to take care of your daily-life expenses. Below, we are going to talk about all the major perks provided by an annuity insurance plan.

Consistent Income

This is the most beneficial perk of having an annuity insurance plan. Most of the annuity insurance plans need you to pay a fixed premium every month and payback a consistent income after retirement. This amount is decided by the type of plan you choose and the amount you pay. You will receive that fixed income every month and can take care of essential expenses utilizing the amount received.

Deferral from Taxes

One of the most loveable perks an annuity provides is the deferral of taxes. Federal government implies taxes on every income you earn or the amount you save. People need to pay a decent amount of their savings whenever they withdraw their savings. But, annuities are different from all the savings plans such as IRA and fixed deposits, etc. Under a deferred annuity plan, you don’t need to pay taxes while withdrawing the money.

Investment Options

Another positive thing about the annuity insurance is that along saving an amount every month for your future requirements, you can also mask investments to reap a return from the market performances. Annuities give you a unique opportunity to invest a portion of your monthly premiums into the market and reap profit from the same.

If you have a good knowledge of the market and can forecast the market performances correctly, you are suggested to invest a part of the retirement annuity into the market. Based on how the market performs, you can get a percentage of profit in your monthly income provided by the insurance company.

Negatives You Should Know

Like their positives, annuity insurance plans have their negatives as well. Let’s have a look at some of the cons of an annuity insurance plan.

Varying Income

Usually, annuities are known for providing a consistent income in your account every month, but there are exceptions to everything. When you buy a varying annuity insurance plan, you get to invest in a portion of your premium in the market. The value of your money fluctuates as per the market performances.

If the market slows down, the value for money will decrease and you will face the loss as well. This loss will reflect the monthly income you receive from the insurance provider. If you keep losing money in the market, your monthly income will decrease gradually and that may be insufficient to take care of your monthly expenses.

Tax Deduction

Though savings in most of the annuity insurance plans are deferred from federal government taxes, you may not be able to utilize it if you are in low or medium tax bracket and buy an annuity with your after-tax dollars. This may lead you in the higher tax brackets and may have to a pay decent amount for the same.

Surrender Charges

Annuities are made to consistently invest for a long period and if you plan to withdraw the annuity after some time. This may lead you to pay a hefty fine as the surrender charges if you wish to stop paying the annuity. Also, there are annuity insurance plans that make the payback of the amount deposited a very complicated process, and sometimes people have to just forget about their investments.


Now that you have gone through both the positives and negatives of annuity insurance plans, you might have been in a condition to decide whether you need an annuity plan or not. If you haven’t, we are in here to help you. Despite the cons you read above, annuity insurance is still the only reliable insurance that can provide a consistent monthly income to these seniors.

Just filling a request form on the insurance portal, you can receive top annuity insurance quotes from various insurance providers. The experts from these insurance plans will reach and you can talk to them in detail about the suitable insurance plans for you. Depending on the coverage offered and the budget you prefer, you can choose insurance to spend your retirement life comfortably.

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