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.

Comparison Shopping for Annuities

A good question and answer piece from the Chicago Tribune. The reader had just purchased a $400,000 immediate annuity at a relatively young age. The purchase was also made from one insurer in a relatively low interest rate environment. Having both a pension and Social Security (both are lifetime annuities), I would not have committed half my portfolio to an income annuity at the relatively young age of 63 and during a period of low interest rates . It does not appear that the annuity came with...

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Manulife Under Pressure - Hurt by Lack of Hedging in Variable Annuity Business

Canadian insurer Manulife Financial is under investigation by the Ontario Securities Commission for failing to disclose certain obligations related to its variable annuity products. Manulife's stock price has been under pressure and the company had to draw down a $3 billon loan. Manulife, the parent of John Hancock , has reported billion dollar earnings losses in its two most recent quarters. The company is suffering from the decision not to hedge effectively within its variable annuity...

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A Changing Variable Annuity Landscape -- What to Watch for in the Next Few Years

This is the second part of an interview with...

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A Changing Variable Annuity Landscape -- The Consumer Perspective

This is the first part of an interview with Ryan Hinchey.

Ryan is a consulting...

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Guaranteed Living Benefit

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Employers Cautious About Annuities in 401k Plans

Employers who offer 401k plans seem intrigued by the notion of providing an annuity option to employees who participate in the plans. Recent stock market volatility makes the prospect of stable, guaranteed income very attractive in theory: Given the stock market’s volatility, Silgan is one of a number of 401(k) plan sponsors seriously discussing adding an annuity option to their 401(k) plans. With most employees’ 401(k) accounts decimated, the idea of providing guaranteed post-...

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