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Considering annuities? Read fine print
VAN NUYS, Calif. (KABC) -- With the stock market down and CD rates very low, annuities have become a very popular investment tool. That's because many annuities can provide income at a guaranteed rate of return. But if you're considering one, then you need to know what's in the fine print.
Milton Cohen of Van Nuys is thoroughly enjoying retirement with his friend Regina Bell. But a short time ago he was worried about his savings. He had $30,000 of his money in a CD that matured, and his bank suggested he put it into an annuity to get an even higher interest rate for life, guaranteed.
Brian Gilder, a certified financial planner and chartered life underwriter, is now advising Milton, and he says what happened to Milton can happen to anyone and especially seniors.
"Most people don't understand what annuities are," said Gilder.
That's because first of all there are many different types of annuities to buy.
And remember, your money must remain in the annuity for anywhere from five to 10 years to avoid any charges.
Milton is OK with it now, but he learned a valuable lesson.
"Read the small print," said Milton.
Another fact you should know about annuities: they are not FDIC insured, even if you buy one from a bank that is FDIC insured. Depending on the annuity, there may be no guarantee you will get all of your money back.
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