Bank annuities can be an attractive alternative to a standard bank CD or savings account. An annuity collects money from an investor for a period of time then makes a payment at a given rate in the future. Each annuity is structured differently, with some paying out until an account holder dies and some expiring after a certain period of time. Banks did not always offer these accounts, and many feel they should not be doing so now.
Annuities were first offered by insurance companies as a form of retirement insurance. An account holder paid a premium, and that premium was returned at some point in the future. If the individual passed away before that time, the insurance company would profit. If the account holder live for a very long time, he or she would make money.
Bank Offered Annuities
Today, annuities are commonly offered by financial institutions and insurance companies alike. They are generally less controversial, but many people still find it distasteful for banks to offer the options. These critics feel banks should not be involved in speculative investments of any form. They would prefer banks only issue accounts. Since annuities can be traded, many people feel they are not a viable form of account with a bank.