Its my understanding that insurance companies have always invested heavy in U. S. Treasuries. Predictions are treasuries will be hit hard sometime over the next 24 months. Since most annuities are not FDIC insured what happen if this happens?
Jim
of CA
@
Feb 19, 2010 14:56:12 PM
stability of insurance companies
comparing insurance companies to other business and especially banks http://www.fdic.gov/bank/individual/failed/banklist.html their financial strength stacks up very well. Over 50 banks have crumble this year alone.
Carl
of OH
@
May 22, 2009 18:08:36 PM
annuities
Proof is in the pudding: Since the current market crash started in the lost quarter of 2007 how much has been lost, of principal, in a fixed annuity? ZERO..I've talked with many investors who only wish they had recieved a zero return. Rather, they got a -20%, -30@ or more. So, take your shots and make your bitter opposing remarks. You can't argue the safetof annuities. Annuities are not for risk takers, they are for "conservative" investors looking for capital preservation and a competitive "fixed" return. For those people, it's a decent fit for some of their assets. By the way, yes, I sell annuities, and I'm proud of it.
brady
of CA
@
Mar 16, 2009 00:28:17 AM
Annuities
Wow, I cannot believe the amount of mis-information out there.
1st - There are Lifetime income annuities that can be adjusted for inflation.
2nd - There are annuities that WILL NOT penalize the policy holder if making 10% annual withdrawals.
3rd - There are annuities that will guarantee your principal intact (less any withdrawals the policy holder makes) should you forfeit the policy.
4th - Not all annuities have outlandish 14 year surrender charge periods.
5th - That's why when dealing with insurance backed products, it's in your best interest to work with Mutually owned companies vs. Publicly owned companies such as AIG, Metlife, etc. who have significantly seen their assets dwindle due to poor management decisions and seeing their stock prices drop like a 2 ton rock.
6th - For those who still want to take advantage of the downturns or invest aggressively in the stock market but not risk losing their principal, there are living benefits available to variable annuity policy holders who have the option of guaranteeing their principal OR future accumulated values against further market losses. It's their choosing.
Before any ignorant bashing and posting mis-information on the web for readers to read, at least do your reader's a favor and try doing some due diligence first before posting a bunch of fluff.
NYL_Financial_Advisor
Series 7 Registered Rep.
Series 66 Investment Advisor
NYL_Financial_Advisor
of IL
@
Mar 02, 2009 07:59:01 AM
ANNUITIES
I think that it would be a good idea for everybody to refer to the web site: gusgutstadt.blogspot.com for some very sage advice on annuities - based on experience and ownership.
L.R. Gutstadt
of CA
@
Feb 21, 2009 21:09:23 PM
annuities
I retired a year ago last July. I purchased an annuity that gave me a 4% bonus plus the innitial amount is guaranteed. I was aware of the cost because at one time, I sold them. I'm down nearly 50% on my other investments. The actual value of my annuity has dropped more than that, BUT, my original investment is guaranteed. What I first thought to be a questionable investment is now a lifesaver.
Neil R. Beaupre
of NH
@
Feb 20, 2009 19:38:51 PM
Good Luck
Mr Robertson from NV needs to think twice about some of his words. It's not like it's really easy for someone to do their own research and buy the best annuity without some advice.
All a bunch of liquidity does for most people is give them losses or returns that are less than inflation.
If someone put a $100,000 into an annuity with a 14 year surrender charge and someone else put that same 100,000 into the S&P 500 back on 1/1/08, even with the so called hefty surrender charge, the first person would get a lot more money back.
And they could take 10% without losing a dime.
The person who put their money in the market is afraid to touch any of it because the need to leave it all there hoping to make back their losses.
Bruce H, Indianapolis, IN
of IN
@
Feb 03, 2009 22:17:26 PM
If they're all bad, then mortgages are all bad too.
Mr. Robinson is obviously a stock broker, having no patience to understand anything that carries no risk. A high water mark is inherent in a variable annuity. A fixed annuity, conversely does not offer the opportunity to lose money. The ones I'm familiar with do not carry any fees, guaranteed for the life of the contract -- unless the saver elects to pay .45% a year (yes, less than a half percent) to guarantee an 8% return via an income rider. It is appropriate for those who want to augment their social security income with a steady stream for life. Then as stated in the article, they can feel much more comfortable in more aggressive investing for their remaining funds.
Jim Beach
of FL
@
Feb 03, 2009 19:22:49 PM
Missing Annuity Concerns
The most glaring item missing from the article is the guaranteed income will not increase or adjust for inflation. A major issue if your cost of living doubles in approx. 20 years at only 3% inflation.
It is also misleading to state that "annuities protect you against losses". The guarantees do NOT protect your account value from going down but maintain a "high water mark" (usually reset each contract anniversary to the higher of your account value or current high water mark).
When you start the guaranteed income stream (for example 5% per year based on the high water mark) you draw from your account value. Depending on your investent returns you may or may not deplete your account value to zero in your lifetime. If you understand how the variability of returns while withdrawing funds impacts account value you probably will deplete the account value in your lifetime. When the account value is depleted only then does the guarantee provided by the insurance company really kick in: they keep paying the income stream until death.
If one your goals was to leave a legacy to your heirs this approach does not help. If you have another option to offset inflation (usually done by getting investment growth above the inflation rate and the higher annuity expenses make this more difficult to acheive) the guarantees may be worth paying for. If not an overall investment plan is possibly better than spending additional expenses for a partial solution.
Barry from NE
of NE
@
Jan 30, 2009 09:51:40 AM
Brrrrawk!
Fair article that could use some more details.
I simply can't resist ribbing Mr. Robinson of NV who seems so opposed to any annuity strategy for any portion of someone's assets that would be earmarked for use to generate income. His parroted warning that all annuities and all the people who sell them are bad is, in my opinion, a bit over the top.
When a qualified financial advisor (go to www.finra.org to check background, and look for designations and experience) is asked to assist someone in making decisions about securing their future income streams, customers often like the idea of having the coffers of an insurance company backing them up if markets don't cooperate. This is what I've found to be driving their popularity in planning rather than the "greedy schill" sales practices Mr. Robinson purports. In fact many of the variable deferred annuities have no or low surrender charges and very low commissions or fees to the planner. Almost every annuity manufacturer offers some version of this.
Also, most competent advisors let the customer come to their own conclusions as to the strategy they want to deploy (and whether or not that will include annuties) in a written investment policy statement. We've found that by presenting several strategies (some with annuities, some without) to drive income into a household, the informed buyer can make a good decision and get a positive outcome whether annuities are used or not. There's more than one way to skin a cat, so they say.
The article correctly identifies that more risk averse clients like the features annuities offer, and there are a lot more risk averse folks out there now given last year's market performance. But, when explained in detail and compared with other income strategies, annuities can (sometimes) make some sense. We see maybe 1 out of 4 households where they fit into an income strategy and have an appeal to the customer.
Mr. Robinson does make one excellent point, and that is that the guarantees an insurance company promises are only as good as the guarantor. With the trouble at AIG, Security Benefit, The Hartford and other insurance companies, there are some questions as to whether or not they will be able to deliver on guarantees made today that may need to deliver in the future. Additionally, ratings agencies have done a very poor job of identifying potentially troubling assets. Best bet here is to only engage annuity offerings (if appropriate) from companies with the highest of ratings from Moodys, Fitch, S&P, etc.
In summary, annuities may make some sense to the right person in the context of a well developed investment policy statement. The marketplace seems to agree with this.
U.S. News's "America's Best" delivers recognized, authoritative information and clear, objective rankings that help readers plan for their life and ultimately, make the most of it.
Jim of CA @ Feb 19, 2010 14:56:12 PM
Carl of OH @ May 22, 2009 18:08:36 PM
brady of CA @ Mar 16, 2009 00:28:17 AM
NYL_Financial_Advisor of IL @ Mar 02, 2009 07:59:01 AM
L.R. Gutstadt of CA @ Feb 21, 2009 21:09:23 PM
Neil R. Beaupre of NH @ Feb 20, 2009 19:38:51 PM
Bruce H, Indianapolis, IN of IN @ Feb 03, 2009 22:17:26 PM
Jim Beach of FL @ Feb 03, 2009 19:22:49 PM
Barry from NE of NE @ Jan 30, 2009 09:51:40 AM
Bill of CT @ Jan 29, 2009 14:57:09 PM
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