Definition of 'Hybrid Annuity'
With a hybrid annuity, you can choose to invest your money in a variety of underlying investments, such as stocks, bonds, and mutual funds. The performance of your investments will determine the amount of money you receive in retirement.
Hybrid annuities typically offer a guaranteed minimum withdrawal benefit (GMWB). This means that you will receive a certain amount of money each year, regardless of the performance of your investments. The GMWB can be a valuable feature for retirees who want to ensure that they have a steady stream of income in retirement.
Hybrid annuities can be a good option for investors who are looking for a higher potential return than a traditional annuity, but who also want some protection against market risk. However, it is important to understand the risks associated with this type of annuity before you invest.
Here are some of the pros and cons of hybrid annuities:
* Higher potential return than a traditional annuity
* Guaranteed minimum withdrawal benefit
* Flexibility to choose your investments
* Tax-deferred growth
* Higher fees than a traditional annuity
* More risk than a traditional annuity
* Potential for loss of principal
* Complex product that may be difficult to understand
If you are considering investing in a hybrid annuity, it is important to speak with a financial advisor to learn more about the risks and rewards of this type of annuity.
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