For investors thinking about purchasing an annuity, there are two things they should do first. One, speak with a financial advisor (other than the one trying to sell you the annuity) so you can get an unbiased explanation of how the annuity contract works.
Second, consider these three reasons not to buy an annuity.
Reason 1: Limited Control of Your Principal, Income, and Investment Options
Money in Annuities May be Locked Up
Most types of annuities restrict access to your principal for a certain number of years. If you have an unforeseen need for cash and have to exit the contract early, you might have to a pay a penalty to access your money.
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