Final answer:
When reviewing annuity options with a consumer, red flags to consider include high fees, limited liquidity, and complex or unclear terms.
Step-by-step explanation:
When reviewing annuity options with a consumer, there are several red flags to look out for:
- High fees: One red flag is if the annuity has high fees. These fees can eat into the earnings and decrease the overall return on investment. It's important to carefully review the fee structure before making a decision.
- Limited liquidity: Another red flag is if the annuity has limited liquidity. Some annuities have restrictions on when and how much money can be withdrawn. This lack of flexibility may not be suitable for someone who may need quick access to their funds.
- Complex or unclear terms: A third red flag is if the annuity has complex or unclear terms. Annuities can be quite complex financial products, and it's important to fully understand the terms and conditions. If the terms are confusing or not clearly explained, it may be a sign that the annuity is not a good option.
These are just a few examples of red flags to watch out for when reviewing annuity options. It's important to conduct thorough research and consult with a financial advisor before making any decisions.