Annuities are the investment contracts which are designed to generate an easy income flow for the annuitant after his retirement and throughout his life. These are long time saving tools and also enjoy advantageous tax facilities from the government. Below is given a list of merits and demerits of annuities.
The primary merit of annuities is that you are guaranteed a regular financial back up throughout your life after the retirement. Then, it’s good that annuities are tax paid. Besides, now you can lead a stress free life when you have somebody else to take care of the investments. Moreover, you are guaranteed that the capital would last as long as you live.
But there are certain demerits too. In case the person expires early, the annuity company is allowed to take up the entire capital. Then, the annuity cannot be safeguarded against any inflation issues. Again, the tax payment criteria can be disadvantageous in case the person is on low or poor marginal tax level.
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Tags: Annuities
Posted June 23, 2011 by John Wane under Financial News