Fixed annuities usually thought for their safety. After all, you can not lose money due to falling stock market when they are in them, right? Yes, but that does not necessarily mean you are safe.
While fixed annuities are safe in terms of not losing money in the market perspective, one thing you must consider that there are other aspects to them that can make them nesigurnim.Prva thing is their lack of liquidity. Of course there is a component of tax deferral, however, one thing to consider is that if you need money, you may have to pay a penalty to get to it. This is often called surrender charges. Often times, the surrender charges can be quite steep for a pension. This makes them risky from the point of liquidity cost.
Another factor to consider is the rating of the insurance company. Now, if you ask me, grades are not necessarily "end all" when it comes to safety. In no apples-to-apples comparison, Merrill Lynch, Enron was rated as a buy as the stock slid from its peak in the single digits. Ratings are not always reliable and it applies to insurance companies, as well. Security Insurance Company determines the safety of your annuity as well. It is important to do your due diligence and do well when choosing an insurance company.
There are many other factors to consider when it comes to choosing a fixed annuities, which will determine their safety.
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