Many consumers are tempted by the "guaranteed" value of an annuity in today's uncertain economic times, but experts advise they still approach the product with caution.
It can be nearly impossible to gauge the value and legitimacy of any one annuity product without the help of professional guidance, according to a report by Daily Finance. Annuities are contracts taken out by consumers with life insurance companies, which provide a steady stream of income over a person's retirement. Though they seem simple, they can be a complicated purchase for the uninitiated and many end up purchasing annuities that don't quite fit their retirement portfolio.
Consumers should use the product to supplement other retirement options - not replace them.
"They should be a long-term vehicle to provide a base guarantee of return and lifetime income in retirement above CDs or other guaranteed income products," Ryan Peterson, president at Wisdom & Wealth Solutions, told the source.
Recent data shows annuities are becoming more popular. Data from the Insured Retirement Institute showed industry-wide annuity sales climbed 17 percent during the first quarter of 2011 from a year earlier.