Life insurance immediate fixed annuity one option for investment

Nov 09, 2010

Some life insurance products may help consumers as they get older.

One option offered by life insurance companies is an annuity, which can provide consumers with income later in life.

In a recent piece for CBS MoneyWatch, financial expert Steve Vernon noted having an annuity is a way to ensure a source of money during retirement. Depending on the type of product, these investment vehicles may present less risk than other options.

Vernon recommended looking into an immediate fixed annuity. While it doesn't provide the same growth potential as variable rate products, it does offer a bit more financial surety.

"An immediate fixed annuity protects against two significant retirement risks: investment risk, which is the risk of your investments declining in value, and longevity risk, or the risk you’ll live longer than expected," Vernon wrote.

Consumers who are willing to take on risk may consider a variable rate annuity offered by a life insurance company. These products are generally tied to more volatile sources of investment, such as the stock market.

While they may offer a greater return rate, they also present to danger of funds being sunk by a downturn in the market.

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