Annuity or guaranteed income for life: Which would you rather buy?

[Insurance Forums Staff]

Insurance Forums Staff submitted a new article

Annuity or guaranteed income for life: Which would you rather buy?

Morningstar conducts experiment to see if alternative branding makes a difference to U.S. adults.

Continue reading the Original Article.

 

[ATM]

I am sure that consumers would also prefer 'Guaranteed, income tax free payment at death" to "life insurance".

 

[LostDollar]

(Caveat, not an agent.)

I don't see this as a particularly useful article for either insurance agents or consumers.

My insurance agent training on Insurance Forums suggests that successful agents, at least those who sell Final Expense and cross sell to other products, are already using this approach to prospective customers.

From the perspective of the consumer, I think a very complex subject has been dumbed down and simplified to a point where the comments are not useful.

When I tried to look at annuities a few months ago I was soon overwhelmed and complexed out of the market.

First: I think there are some annuities that guarantee payments for terms of less than a lifetime.

Second: I would have to believe that there may be a significant number of prospective annuity purchasers who would want a guaranteed income stream over more than one life.

Three:

I found the "entire process" of an annuity to be very complex and I couldn't understand it. There is the "buying stage" which seems to be filled with all kinds of choices and difficult to understand financial techniques. There is a "storage stage" where your money disappears for awhile. Then there is the "usage stage" where your money reappears and comes back to you in periodic payments.

All the fine points of financial technology involved in the buying stage and storage stage are most unclear to me. Same for understanding how the money flows between the three steps.

The article talks only about one possible result, using a helicopter view. So, as I said I don't see it as of much use to either sellers or buyers of the product.

 

[tikibarrister]

"Which would you rather buy: An annuity or guaranteed income for life?"

An inflation-indexed guaranteed income for life. Is such a product available?

 

[Tahoe Ray]

"Which would you rather buy: An annuity or guaranteed income for life?"

An inflation-indexed guaranteed income for life. Is such a product available?

Several. Some are true inflation (tied to CPI) others are tied to indexed or market returns.

Athene has both on their Ascent Pro product.

 

[Tahoe Ray]

First: I think there are some annuities that guarantee payments for terms of less than a lifetime.

Sure. But those are normally used in more complex planning scenarios.

Second: I would have to believe that there may be a significant number of prospective annuity purchasers who would want a guaranteed income stream over more than one life.

Many carriers offer this option.

Three:

I found the "entire process" of an annuity to be very complex and I couldn't understand it. There is the "buying stage" which seems to be filled with all kinds of choices and difficult to understand financial techniques. There is a "storage stage" where your money disappears for awhile. Then there is the "usage stage" where your money reappears and comes back to you in periodic payments.

This is a very confusing and inaccurate description. The only product where your money "disappears" before receiving income is a DIA (deferred income annuity) and there are few carriers that do any meaningful business in those.

Variable and fixed annuities (w/ lifetime income riders) provide you with statement values, internet access to your account, and an opportunity to grow your money both before and while receiving income.

 

[rousemark]

The heading was senseless to me.. Back in the dark ages when I sold annuities, we sold them to provide a guaranteed income for life.

 

[Tahoe Ray]

The heading was senseless to me.. Back in the dark ages when I sold annuities, we sold them to provide a guaranteed income for life.

We do a lot of business in the "accumulation only" space. MYGAs, FIAs, etc.

The clients never desire income, only rate/return.

 

[rousemark]

We do a lot of business in the "accumulation only" space. MYGAs, FIAs, etc.

The clients never desire income, only rate/return.

I know, but when I was selling them,(many years ago) it was almost always with the idea of it would provide a guaranteed income when they retired.

 

[CALTCAgent]

I like the ones that are 90% liquid rather than the ones with a 10% penalty.