Annuities get a bad rap—often unfairly. Misconceptions about costs, flexibility, and beneficiary rights prevent many retirees from considering what could be a valuable retirement income tool. Let's bust the most common myths with facts.
Myth #1: "Annuities Are Too Expensive"
"I've heard annuities have huge fees that eat up all your returns."
The Truth
Fixed and Fixed Indexed Annuities typically have ZERO ongoing fees unless you add optional riders. The insurance company earns money through spread (the difference between what they earn on investments and what they credit to you).
Fee Breakdown:
- • Fixed Annuities: $0/year in fees
- • Fixed Indexed Annuities: $0/year (unless you add income rider: ~0.95%/year)
- • Variable Annuities: 2-3%/year (these ARE expensive)
Bottom Line: Fixed and FIA products are not expensive. Atlas Annuities focuses primarily on low-fee or no-fee annuity types.
Myth #2: "You Can Lose Your Principal"
"If the market crashes, I'll lose everything I invested."
The Truth
Fixed and Fixed Indexed Annuities guarantee 100% principal protection. Your money is NOT invested directly in the stock market. Even if the S&P 500 drops 30%, your account value stays intact.
Example: You invest $200,000 in an FIA. During a market crash, the S&P 500 drops 25%. Your account value? Still $200,000 (plus any previously credited interest). Worst case: you earn 0% that year.
Exception: Variable annuities CAN lose principal because they're invested in sub-accounts subject to market risk. We typically don't recommend these for conservative investors.
Myth #3: "If You Die Early, Your Beneficiaries Get Nothing"
"The insurance company keeps all your money if you pass away."
The Truth
This is FALSE. Death benefits depend on the annuity type and whether you've annuitized:
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During Accumulation (before income starts):
Beneficiaries receive your full account value (or minimum guaranteed amount). Surrender charges are waived upon death.
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After Annuitization (life-only income):
If you chose "life only" for maximum income, payments stop at death. BUT you can choose joint-life, period-certain, or death benefit riders to protect beneficiaries.
Bottom Line: You control the death benefit structure. Atlas Annuities helps you balance income maximization with legacy goals.
Myth #4: "You Can Never Access Your Money"
The Truth
Most annuities allow 10% penalty-free withdrawals annually, even during the surrender period. Yes, there are surrender charges for large early withdrawals (typically years 1-7), but you're not completely locked in. Plus, many annuities waive surrender charges for nursing home confinement, terminal illness, or death.
Myth #5: "Annuities Are Only for Old People"
The Truth
While annuities are most common for ages 55-75, younger investors can benefit from tax-deferred growth in non-qualified annuities after maxing out IRAs/401(k)s. Deferred income annuities purchased in your 50s provide higher payouts when income starts in your 70s. Age matters, but it's not a dealbreaker.
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