All About Retirement & Insurance


Security is Spelled A-N-N-U-I-T-Y

Syndicated Columnists (ANNUITY.COM)
November 2021


Stability, volatility control, guarantees, and security are all synonyms for Annuities.

In unsettling times, 1906, 1919, 1929, 1951, 1978, 1982, 1987, 2001, 2008, 2020, and other years the need for stability becomes essential. Strength helps restore confidence is a stress remover and a confidence agent.

Fixed annuities provide those features; they are safe, guaranteed, secure, and have no market risk exposure. As we accumulate funds for retirement, security, a child’s education, and other important life goals, the need for something tangible such as safety becomes an important goal. Too often, we are tempted with yields and returns based on a performance that cannot be measured and cannot be accurately forecasted.

Annuities are contracts with written guarantees in place to provide specific benefits. These benefits can be customized to accomplish a wide range of goals. The combination of guaranteed yields and written contractual provisions provide the basis for safety and security.

Interest rates are guaranteed and insured. These rates are based on various factors and are disclosed in advance of purchasing an annuity. Buying an annuity provides a powerful tool for reaching goals in life that are basic to security.

Every fixed annuity sold in the United States is back regulation provided by each state Department of Insurance. (DOI) The DOI regulates the insurance company’s financial strength and its ability to provide claims-paying power.

Safety, security, risk-free, contractual guarantees: Annuities!

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Annuities as an Investment Vehicle

Syndicated Columnists (ANNUITY.COM)
November 2021


Annuities can provide guarantees in your essential investments.

Annuities are investment products with an insurance component based on the financial strength of the annuity issuing insurance company. Annuities offer an attractive alternative to secure a steady lifetime income stream with flexible options based on the investor’s preferences of security and risk. Annuities are also unique in the sense that income from gains and contributions are tax-deferred until you decide to withdraw.

Fixed vs. Variable Annuity Investment Issues

Fixed annuities can provide a certain measure of protection against the vagaries of the market since annuities are tied to the index, as opposed to individual stocks. Besides, the issuing company guarantees a bottom line, and your investment is protected from being wiped out by market risk or downside. The question of whether to annuitize your investment or allow it to appreciate and withdraw in a lump sum depends on your financial status upon retirement, including your tax bracket and other sources of income.

Variable annuities are classified as securities and can offer a lot more flexibility to the investor, allowing multiple sub-accounts for investments. The returns from variable annuities depend on the performance of your accounts. Variable annuities are highly attractive to investors who want higher returns than a traditional retirement investment vehicle but which offers some of the expected benefits and safety nets associated with insurance and other retirement investments. Variable annuities can lose value and have market exposure.

Annuity benefits from an Investment perspective

Due to the highly profitable nature of annuity products, insurance companies provide a variety of incentives and bonuses to get investors to transfer. While annuities and the net returns they generate are based on a series of factors that vary depending on the issuing company and your choice of annuity, they offer tremendous flexibility in transferring sub-accounts and the entire annuity itself. This generally helps to offset the early surrender charges applicable when you bail out on an annuity investment.

Ultimately, the essential benefits from an annuity are a death benefit, tax deferral, and guaranteed income payments. No other investment vehicle will continue making payments without management or risk, even if you live well into a ripe old age. Either your existing capital dries up, or you have to continue managing, with some risk, an investment portfolio. With an annuity, the accumulation and distribution phases of investment are merged. What you get is an investment vehicle that offers substantial and continued returns with relatively lower or no risks in the long term.

It is to be noted that there are various kinds of annuities ( immediate fixed, deferred variable, etc. ) within the two main types and numerous insurance companies that offer annuity products. Products with varying rates of return, different administrative and annual charges, and differing corporate policies for allocation of sub-accounts, annuity surrenders, and transfers. Each annuity and each company has its own set of advantages and features. Which annuity from what company is most suitable for you, and offers the most benefits, should be decided in consultation with your financial advisor.

Annuity Riders

Syndicated Columnists (ANNUITY.COM)
November 2021



Annuity riders can help maximize the benefits annuities provide

Many people are familiar with the concept of riders and how a rider pertains to homeowners’ insurance. For example, if a homeowner possesses valuable art investments, the homeowner may elect to purchase an insurance rider to gain extra coverage beyond a standard policy, to protect their art investment. An annuity rider is similar, in that it can be purchased by the annuity holder and then be attached to an annuity. Whereas riders on insurance policies protect and ensure the property.


Annuity riders protect principal and income.

Annuity riders on fixed and fixed indexed annuities are designed to guarantee the policyholder a fixed, specified dollar amount for a specific period of time. Such a rider protects the annuity holder by ensuring that the holder will receive guaranteed distributions in a specific dollar amount and thus the rider protects the annuity owner’s income.

The most common type of annuity rider is the income rider. One favorite type of income rider is the guaranteed income rider. This rider is attached to an annuity to provide the purchaser with a secure retirement. Usually, the contract involves a single, or lump-sum premium, in exchange for which the payments are guaranteed on a monthly, quarterly, or yearly basis. Withdrawal benefits provide options for withdrawing sums and percentages of growth on investments. Some annuities are available with certain benefits already attached, while others allow the attachment of this rider based on the annuity buyer’s preference.

Another often seen annuity rider is a death benefit. If the policy owner dies, the person selected as a beneficiary will receive either all of the money in the account or some guaranteed minimum (such as all purchase payments minus prior withdrawals).

A return of premium rider guarantees that the annuity owner will receive a return of at least the initial amount paid as the premium. The withdrawals can be structured in any number of ways, but an essential feature is that under no circumstances will he or she be paid less than the amount invested.

Annuity riders can be a valuable feature to add when making an annuity purchase. The rider can be tailored to the specific needs of a given purchaser. It is essential to know the options available, as well as the possible advantages and disadvantages of any given annuity rider. The annuity purchaser must choose the annuity that best fits his or her future goals and expectations.

Advisors: Annuities A Great Fit For Middle- And Mass-Affluent, Survey Finds

November 2021


More than a third of pre-retirees are very worried about running out of money in retirement, according to Secure Retirement Institute research.

Annuities can protect principal and provide guaranteed lifetime income, alleviating pre-retirees’ and retirees’ concerns about their longevity risk. However, while annuities have features uniquely suited to retirement, they are not necessarily appropriate for all retiree and pre-retiree investors.

New SRI research asked advisors which market segment was the best suited for annuities, among their typical retiree and pre-retiree clients. The research also looked at whether advisors have seen any changes in clients’ views about annuities.

Most advisors consider wealthier clients (with $1 million or more in household investable assets) to be a less appropriate segment for annuities than clients with lower wealth levels.

Among advisors servicing middle- and mass-affluent market segment (under $500,000 in assets) retiree and pre-retiree clients, nearly half (48%) feel that annuities are most appropriate for these clients.

Other SRI research shows households with less than $500,000 in investable assets made up 60% of annuity owners; households with $500,000 to $999,999 in investable assets and households with $1 million or more each represented 20% of owners.

When it comes to how much advisors recommend investing in annuities, the broad answer is: It depends. Advisors would generally recommend a substantial proportion of retirees’ and pre-retirees’ assets — $1 in every $3, on average — should be put into annuities, depending on the client’s wealth levels and the advisor’s own affiliation with a distribution channel.

Advisors servicing clients with less than $500,000 in household investable assets would recommend 37% of the portfolio be placed in annuities, on average. Advisors working with wealthier clients feel that their clients should only invest 27% of their assets in annuities.

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Are clients expressing interest in annuities? Not necessarily, according to SRI research. On average, the vast majority of recently retired and pre-retiree clients — 79% — did not bring up the subject of annuities with their advisors over the past year.

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Advisors whose typical retiree and pre-retiree clients have less than $500,000 in household investable assets report that nearly one quarter raised the issue; only 14% of the clients of advisors catering to clients with $1 million or more in assets brought up annuities.

While they may not be bringing up annuities, advisors believe that retirees and pre-retirees have better perceptions of annuity products in recent years. About 4 in 10 advisors agree that their clients’ perceptions of annuities have improved over the past several years.

“The COVID-19 pandemic led to extreme market volatility and investor anxiety. It also may have led pre-retirees and recent retirees to consider how their portfolios are doing, seeking ways to protect their assets against loss,” says Matt Drinkwater, corporate vice president of Retirement Research, SRI.