Safety of Principal
Safety of principal in any investment is affected by a number of risks. Interest rates, business cycles, price levels, consumer confidence…any or all of these things can affect the value of an investment. However, regardless of these risks, many annuity contracts guarantee to return 100% of the contract owner’s principal, less any withdrawals or loans. This contractual guarantee does not eliminate the risk or the asset value fluctuation necessarily, but assures that the contract owner’s risk is limited only to the interest within the contract. This is a significant advantage the annuity has over alternative investments such as corporate or municipal bonds.
Last Updated: 9/23/2012 10:05:00 PM