One of the fixed annuity disadvantages that sticks out in most people’s mind is the preponderance of eager salesmen that push this insurance product. It is no secret that insurance agents receive a larger commission from the sale of an annuity than they do other insurance products. Because of this return on their sales efforts, there opens a unique window to oversell annuities.

Many of the warnings of fixed annuities that you see online are regarding these annuity contracts being sold to individuals that are not suitable for the policy. Seniors tend to be particularly vulnerable to this sort of overselling.

Now it is important to note that this does not mean that the product is altogether bad or inappropriate for seniors or other investors. It simply means that a degree of education and caution needs to precede any purchase of such annuity contracts. You should be comfortable with the agent of financial planner that is promoting the product. Make sure they can explain why the annuity works in their situation, and that they spell out the potential hazards or risks they would be taking on.

A good financial planner will take the time to explain how the annuity works, and make sure that you are comfortable with its application into your own financial plan. Used correctly, the fixed annuity can be a powerful and stable planning tool. Used incorrectly and it can spell disaster for the unsuspecting investor.

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