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Q. I am 68 years old and retired. I lost over half of my money in the stock market. My advisor suggests I invest in a fixed annuity with a 10% bonus to get back some of my losses. It sounds too good to be true.

Posted by: Paul G.
A. When an insurance company is offering rates far above what most other annuities are paying and it sounds too good to be true -- it probably is. This old saying never loses it's truth. Some companies offer bonuses on the initial contribution as away to lure you in. We refer to these bonuses as bait. Also, be aware that they might pay lower returns in susequent years. Most bonus annuities come with longer surrender periods -- the time you have to wait before you can access your money -- and higher surrender charges -- the penalty you pay for taking your money out early. And if that's not enough, they normally payer higher commissions to the agent. So a big bonus up front to you, a big commission check to the agent... that's a lot of profits taken out already. Remember that the insurance company is in this to make money. They'll find ways to make sure they come out ahead in the end. This is one of the seven mistakes that we address in our free report How To Avoid The Seven Mistakes Annuity Owners Make. I would encourage you to read the report before making any decisions to invest in an annuity. You'll find it to be a very helpful guide.