The mortality credit is also known as the mortality yield. With a participating annuity, premiums paid by those who die earlier than expected contribute to gains of the overall pool and provide a higher yield or credit to survivors than could be achieved through individual investments outside of the pool. The mortality credit increases significantly with age and hedges longevity risk, often creating a return that would be impossible to match in the broader financial markets.
Duration is a measure of the time associated with cash flows or payments from a bond. Duration measures the amount of time (in years from the purchase date) required for a bond owner to receive interest and principal payments that are equal to the cost of the bond.
Long duration bonds have payments that are spread-out over a relatively long period of time (...
Conventional financial wisdom says that bonds should comprise an increasing percentage of a portfolio as the owner ages and heads into retirement.
In theory, a retiree’s need for income and a reduced tolerance for risk are the main drivers of the larger allocation to bonds.
A key consideration, though, is...
A common question is how annuities compare to other financial products that seem similar such as bonds, certificates of deposit (CD) and money market funds. After all, each of these products promises to provide some type of fixed return in exchange for your investment.
Looking at a simple life annuity can help answer this...
As discussed in a recent post, ultra low interest rates are...
Jerry Golden--often referred to as the father of variable life insurance and variable annuities--has had a distinguished career as an innovator...
