These days, annuities have many options, which requires planning and a long-term commitment to make the most of the benefits. A licensed insurance professional can help you understand all the factors to take into consideration. Here are a few points to keep in mind:
Limited access to funds. There may be limitations on your access to the cash value of the annuity. Fees and penalties may apply for early annuitization, or liquidation.
Taxation. The taxable portion of an annuity payment is generally taxed as income, not capital gains.
Inflation. Ask your agent or advisor about options many annuities offer to ensure your payments keep pace with rising costs