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.

Large Declines in Variable Annuity Sales Seen While Fixed Annuity Sales Surge

Sales of variable annuity products in the United States cratered 27% during the first quarter of 2009. First quarter sales were $30.7 billion compared to $40.9 billion during the first three months of 2008. At the same time, sales of fixed annuities surged 74% to $35.6 billion. This is the first time since 1995 that sales of fixed annuities have exceeded sales of variable annuities for two straight quarters. This sales dynamic is not surprising and is largely a reaction to the market volatility...

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Annuity

Fixed Annuity

Guaranteed Living Benefit

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Annuity

Fixed Annuity

Guaranteed Living Benefit

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Top Financial Planner Comments on Immediate Annuities, Longevity Insurance and Long Term Care

One of the nation's top financial planners is bearish on the recent upsurge in immediate annuity sales. An advocate of maintaining options and flexibility with retirement planning , this financial advisor sees immediate annuities as too restrictive for many financial plans. In contrast to the views on immediate annuities, longevity insurance or longevity annuities are discussed in light of the income and asset allocation options they create for retirees: "Of all the products that are out there...

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Advanced Life Deferred Annuity

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Retirement

Longevity Insurance

Annuity Sales

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Advanced Life Deferred Annuity

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Retirement

Longevity Insurance

Annuity Sales

Deflation Impacts Annuities in UK

There are many concerns about inflation in light of recent government stimulus programs, but deflation can also be a concern for owners of annuities. In the UK, owners of inflation linked annuities are being impacted by the biggest monthly drop in the retail price index since 1948: "Standard Life has already written to its 25,000 customers with RPI-linked annuities to warn them that their income is set to fall, and similar annuities from Prudential will also pay out less." Source: Financial...

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Consumers Should Think Twice about Replacing an Annuity

A very balanced article in the Chicago Tribune discusses what consumers should consider when they are concerned about credit risk or the financial health of their insurance company. Dumping an existing life or annuity policy when reading headlines about the health of an insurer may not be the wisest idea. At a minimum, consumers should seek a couple of informed opinions before replacing an existing policy. There are fees and tax consequences that may come into play. In addition, there are...

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Thirteen Insurance Companies Exit Equity Indexed Annuity Market

There are fewer insurance companies offering equity indexed annuity products. Thirteen insurers have exited the market since the end of 2008. Included among the exits are some better known names such as Principal Financial Group, Genworth Financial, Transamerica , Monumental Life and Protective Life. Many of the companies exiting the market have equity indexed sales that are not a significant part of their overall business. Looming regulatory changes which would require that equity indexed...

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Equity Indexed Annuity