by Guest » Thu Nov 25, 2010 04:37 am
My insurance agent briefly mentioned a product his company (Allstate) is selling. He mentioned a product in which your investment is guaranteed to double every 10 years, has a guaranteed minimum rate of return annually, and the rate of return could be higher depending of the performance of the market. Sounds too good to be true. Any insight as to the product and the above claims.
Posted: Thu Nov 25, 2010 05:28 am Post Subject:
Magic beans... they are all the rage right now.
Posted: Thu Nov 25, 2010 07:40 am Post Subject:
Actually, there are a number of annuities, both fixed and, mostly, variable, that have additional terms written into the contract that will do what you have been told. But you need to read the details in the contract, because some require you to make regular payments into the contract, may prevent you from taking withdrawals in order to get the doubling of cash value (10% per annum if a 10 year contract), and ALL have SURRENDER PENALTIES that rob you of principal if you need to terminate the contract too soon.
If you are considering such a product, my first question to you would be, "Are you fulling funding your employer-sponsored and individual retirement plans?" If you aren't, the variable annuity is probably not suitable for your purposes.
Posted: Fri Nov 26, 2010 07:15 am Post Subject:
Yes, it's true that we're often not aware of the surrender penalties and this creates confusions later on. You should be aware of the charges that are to be deducted out of the principal amount (as Max stated) in case you'd need to withdraw full or part of your investment. Clarify all your doubts with the agent. Don't just look at the payments or the ultimate returns - make sure you consider all the other factors too!
Add your comment