In insurance-ese we call this question suitability. When are annuities suitable for someone to put a significant amount of money into them? To answer that question we need to know a lot of details.
There is a general recipe that a lot of insurance companies are using now for suitability. The main things they want to know are your investment time frame and what percentage of your assets does the annuity money represent. Makes sense right?
No one should ever put all of their money into one type of investment. With annuities there are exorbitant surrender charges as well so your investment timeframe is very important. Would you use an annuity for a short term investment? No way! Surrender charges could take 10% or more of your investment money.
Should you invest long term money into annuities? With a ten year time frame you could have lots of interest growth and maybe even zero surrender charges when you need to take money out of your annuity.
The real question is when should you use annuity if you meet the suitability requirements? If you are working with long-term money and not investing your entire nest egg then when is an annuity right for you?
It is still a very detailed question and will be different for every single person. I have written about the basics in another article called When To Invest In An Annuity. Check it out before you invest. If the descriptions sound like you then be sure to look into the idea further.
Image by John Chroston at geograph.uk.org
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