Annuity

An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.

New Retirement Income Annuity from Fidelity and MetLife

Two leading companies are partnering to provide a new annuity offering. MetLife has developed the "MetLife Growth and Guaranteed Income (MGGI)" product that will be distributed exclusively through Fidelity . The MGGI is a deferred variable annuity that contains a guaranteed lifetime withdrawal benefit ( GLWB ) that, depending on the age of the client, ranges between 4 and 6 percent of the initial single premium. Fidelity will manage a relatively simply fund offering and the M&E fees on the...

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Guaranteed Lifetime Withdrawal Benefit

Read more about New Retirement Income Annuity from Fidelity and MetLife
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Annuity

Guaranteed Lifetime Withdrawal Benefit

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Federal Appeals Court May Vacate SEC Rule 151A

A federal appeals court indicated that it may vacate SEC Rule 151A which would require that fixed indexed annuities be regulated as securities by the Securities and Exchange Commission (SEC). The court determined that the SEC may have failed to properly assess the 151A's potential impact on efficiency, competition and capital formation in the industry. This point is similar to those raised by Sheryl Moore in this interview .

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House Bill Would Apply Fiduciary Status to Annuity Sales

The House Financial Services Committee passed the Investor Protection Act of 2009. This legislation would have a meaningful impact on the sales of annuities and mutual funds as the current suitability standard would be replaced by a much higher fiduciary standard. The net effect would be a big win for financial services consumers. Currently, suitability standards require that financial advisors determine whether a product is appropriate for a given client profile, with risk tolerance as one of...

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