Comments on: Pros And Cons Of Variable Annuities

By: Should You Purchase Annuities? - Amateur Asset Allocator

Should You Purchase Annuities? - Amateur Asset Allocator — Sun, 18 Jul 2010 15:46:40 +0000

[...] The popularity of various types of annuities has grown by leaps and bounds the last several years. Annuities are financial vehicles that guarantee income for life, based on the size of the initial investment and the age of the person receiving the payments (the “annuitant”). Officially classified as insurance products, annuities are available only from insurance companies. In the case of deferred annuities, they’re purchased and allowed to grow in value for many years before being converted to the lifetime income stream (“annuitized”). There is also such a thing as an immediate annuity, which is the most common form of annuity and is basically a fixed annuity that begins paying immediately. Of the two types – fixed and variable – we’re only considering fixed annuities, because there’s significant risk of loss of principal in variable annuities. [...]

By: BW Financial Advice » Blog Archive » What Sre The Pros and Cons of Variable Annuities

Wed, 16 Jun 2010 18:23:17 +0000

[...] Variable annuities are the most popular annuity product on the market right now. Understanding the pros and cons of variable annuities will help you make the right financial [...]

By: Immediate Annuities Pros And Cons - Amateur Asset Allocator

Immediate Annuities Pros And Cons - Amateur Asset Allocator — Tue, 15 Jun 2010 11:02:25 +0000

[...] Variable annuities have been quite the glamorous investment lately, what with their misleading “guaranteed minimum returns” and whatnot. But an older, more traditional form of annuity, the immediate annuity, is by far the better deal for most investors. [...]

By: CD on constant Annuities | Best Advices

CD on constant Annuities | Best Advices — Wed, 20 Jan 2010 20:42:33 +0000

[...] hundreds of articles on topics of personal and financial investments, such as the pros and cons of variable annuities, and where to get a completely free annual credit [...]

By: Ralph Santillo

Ralph Santillo — Thu, 15 Oct 2009 20:44:33 +0000

Is a va appropiate for a 65 year old who could wait about seven years before starting a withdrawal program.

By: Bob

Bob — Mon, 21 Sep 2009 21:29:15 +0000

GK, this is a great product. I have it myself. You did a nice job representing it here. The other way to combat some of the cons is to consider converting part of your IRA into the annuity (rather than post-tax income), given that you can’t touch till 59 and 1/2 anyway, you’ll avoid any sort of surrender charges. I agree that the actual balance is less important, its the guaranteed withdrawal balance that matters. If you want to leave an inheritance, buy a little insurance. Also, after 10 years its a guaranteed 200%, after 20, 400% and after 25 years a 600% return that your annuitized income stream is predicated on if you don’t touch it.

By: TP

TP — Fri, 04 Sep 2009 02:18:16 +0000

This is one of the most balanced reviews of variable annuities that I’ve come across. Good to find straight information with no spin in either direction. I do want to point out one little thing.

“Value dependent on the claims-paying ability of the insurance company in question. If your insurer goes out of business, so does your money.”

The above is listed as one of the cons of variable annuities. It’s only partially true, much as it is for deposits in a bank account. State guaranty funds cover a portion of annuity and life insurance holdings in the event of a company default. It seems to me to be similar to FDIC or SIPC protection.

It’s also my understanding that many people have know idea that state guaranty funds exist, because insurance agents and other financial advisors cannot mention it during the sales process unless asked about it.

Some more info can be found at:
http://www.nolhga.com/policyholderinfo/main.cfm

By: GK

GK — Thu, 02 Jul 2009 05:00:18 +0000

What you fail to mention is that on the guaranteed income side of the Variable Annuity there are no expenses whatsoever all returns are net as are withdrawals. Prudential has a rider that locks in the highest day of your portfolio while in the accumulation stage in addition 7% net is credited to the income side in down years guaranteeing that you double your money in 10 yrs or less. Clients who buy this product are building a guaranteed investment that down the road will provide a lifetime of income. The costs come from the actual investment and only affect the death benefit or a surrender. Assuming someone were to go into the Prudential with the HD7 rider and the market had a negative return for 10 yrs straight the client would be guaranteed that the investment doubled. $100,000 invested in 10 yrs is worth $200,00 at this point client can begin an income stream of 5% a yr on the guaranteed highest achieved value. Personally I don’t see an investment that can even compete. With my program I don’t care the expenses come from the actual balance because I am only interested in providing a lifetime of income to myself and my spouse, whatever is left the kids can fight over. In the same scenerio $100,000 invested in a growth mutual fund that loses for 10 yrs would be worthless and no way to get a lifetime of income based on a minumum of $200,000.

By: Immediate Annuities In Today's Market - Amateur Asset Allocator

Immediate Annuities In Today's Market - Amateur Asset Allocator — Mon, 18 May 2009 11:01:50 +0000

[...] of the primary reasons variable annuities are so popular is their perceived safety in a volatile market environment. The so-called [...]

By: Jase

Jase — Mon, 06 Oct 2008 23:30:36 +0000

I would have to think the living benefits offered on some of the more recent VA’s are a bit more attractive to investors now after the 30% drop of the DJIA. Not a cure-all for sure but for lifetime predictable income they do have a place for some portfolios. Prudential offers one with a 7% annual with daily market lock until the first withdrawal ( then that goes to quarterly market lock) so someone who may be able to go 7-10 yrs before taking an RMD or other distribution may be suited for it. Just my opinion.