Hybrid annuities provide the benefits of a fixed and variable annuity in one contract. In this type of annuity, you have the option to choose how much you’re going to allocate in conservative and fixed-return investments and in volatile investments that offer a bigger opportunity for higher income.
You’re looking into annuities because you want to secure income in retirement, and a hybrid annuity not just offers you that, but it also provides a way for you to grow it even more. More so, your initial investment is not at risk for loss and it grows on a tax-deferred basis.
There are numerous hybrid annuities being sold in the market and the terms used in them can be hard to understand. Also, some market hybrid annuities to be irresistible products that seem too hard to pass on. This leads to even more confusion and poor decisions. If you gave in to purchasing this contract without knowing what it really is, you may face bigger risks in the future or end up with unmet expectations.
Moreover, hybrid annuities have long surrender periods. If you choose to withdraw your money ahead of time, you may have to pay a hefty surrender charge.
Hybrid annuities can work best for individuals who have more years left before retiring or before they intend to receive income from their annuity. If you’re young and looking at a long stretch of years before you retire, this can be a suitable choice for you. This is because you still have a lot of time to let your money sit in the annuity and let it grow in a variety of investments.
To help you make the right choice, consult professionals who are experts on hybrid annuities. Work with someone who’s more focused on finding the best solution, rather than making a sale. That person should be able to answer any question you have about the contract. More so, he or she should be blunt enough to tell you why a hybrid annuity may or may not work for your particular situation.