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.
Good question.
First thing to consider is that--to my knowledge--there are only a few types of annuities offered by Swiss insurance companies.
There is some Annuity Digest content on Swiss annuities that can be found by clicking here.
Great question.
In a nutshell, keep an eye on 30 year U.S. mortgage rates.
Moshe Milevsky does a great job addressing this question in paper he co-authored last spring titled "The Annuity Duration Puzzle".
Withdrawal or surrender charges come into play when annuity owners withdraw all or part of the money in the annuity "early" or before the end of the term stated in the contract.
Surrender charges are often a percentage of the amount the is taken-out of the annuity "early."
This is a good question.
