Most people hold incorrect or misinformed beliefs about annuities. This fantastic article put out by Northwestern Mutual factually destroys these common annuity "false talking points." The truth matters!
Below is my take on the misinformation and false beliefs surrounding the annuity category.
The number one incorrect assumption about annuities that I hear is the belief that when you have a lifetime income stream annuity (SPIA, DIA, QLAC, Income Rider) guarantee...when you die...the evil annuity company keeps any unused money. That contractual structure is called "Life Only", but is only one of over 30 different ways to structure the payments at the time of application.
"Life with Installment Refund" or "Life with Cash Refund" both guarantee a lifetime income stream regardless of how long you live....but also contractually guarantees that one hundred percent of ANY unused money in your account goes in full to the listed beneficiaries on the policy. The evil annuity company doesn't keep a penny!
Another incorrect assumption I hear all the time is the "annuities are expensive." This is just not true. SPIAs (Single Premium Immediate Annuities), DIAs (Deferred Income Annuities), QLACs (Qualified Longevity Annuity Contracts), MYGAs (Multi-Year Guarantee Annuities), and FIAs (Fixed Index Annuities without any attached riders) ALL HAVE NO ANNUAL FEES!
Variable Annuities do have historically high annual fees, but you can also purchase a no-load variable annuity that has no annual fees and one hundred percent liquidity.
I blame the annuity industry for not educating the public on these types of incorrect assumptions, which is why Stan The Annuity Man is the top agent and educator on all things annuity.