U.S. Senator Elizabeth Warren (D., Mass.) is currently conducting a probe into the perks and incentives given to agents who sell ‘Indexed’ Annuities to clients. “In simplest terms, this type of annuity promises a return tied to a stock-market index, while guaranteeing against losses if the market falls.” The way these types of investment instruments work in practice is much more complicated, consumers often misunderstand what they are getting into. Indexed Annuities can be a good investment for certain consumers looking to make a long term investment. Withdrawing the investment in an indexed annuity early can subject the client to early withdrawal penalties. Clients should use caution and be aware of the risks when thinking about purchasing an indexed annuity.
See Leslie Scism, A New Warning on ‘Indexed’ Annuities, The Wall Street Journal, June 7, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
