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.

SEC Files Administrative Complaint Against Annuities Firm Prime Capital Services, Inc

The Securities and Exchange Commission (SEC) has filed an administrative complaint against the New York based annuities firm Prime Capital Services, Inc and its parent company Gilman Ciocia. The SEC claims that Prime Capital Services lured-in elderly investors in Florida with free lunch seminars. The firm allegedly sold unsuitable variable annuities to the elderly investors: The sales pitches, the SEC claims, concealed high costs, lock-in costs and made "material misrepresentations and...

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Is it Time for a Paradigm Shift to Life-Cycle Investing?

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Guaranteed Minimum Withdrawal Benefit

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New Rules for Older Investors - Especially When it Comes to Equities

What are older investors to do right now? Get out of the stock market entirely? Stay out of the market if you have already decided to get out? Get back into the market now or wait and risk further increases while on the sidelines? Place the majority of your savings in bonds? Purchase an immediate annuity ? Purchase that immediate annuity with inflation protection? Tough questions for both investors and their advisors. There are some good thoughts and discussions shared in a recent New York...

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Sales of Variable Annuities Uncertain as Insurers Modify Products

Life and annuity insurers have been revamping their variable annuity product offerings to better fit a post financial crisis environment. As discussed in recent blog entries , variable annuity product revamps basically boil down to increasing prices and benefit reductions. The unanswered question is what impact the product changes will have on variable annuity sales. According to a recent Wall Street Journal Article, variable annuity sales grew at an 11% annual rate from 1995 through 2007...

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A.M. Best Report Suggests Light at the End of the Tunnel for Life and Annuity Companies

Insurance Company rating agency A.M. Best released a report on the state of the industry for life and annuity insurance companies. The report is somewhat optimistic given the carnage the industry has experienced over the past year or so. The industry as a whole managed to eke out a small amount of net income --$91.5 million--for 2008. However, capital losses for 2008 reached $19.6 billion. Companies such as Allstate Corporation and The Hartford Financial Services have been hit hardest. However...

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