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These have been around for a while. For someone who doesn't like the risk the market has, but would like the upside potential, they aren't a bad idea.Originally posted by Indy Coug View Post
What I dislike about them is how they are sometimes sold. Sold as 5% income for life. Well let's say you put in a hundred thousand and the market goes to $50,000. The good part is you get $5,000 a year for life. If you live 20 years, you got your money back, not income. If you live 10 years, you lost $50,000, unless you also had a death benefit, then your heirs would get that.
Variable annuities, regardless of what Suzie Orman says, can be excellent. However they really have to be suited to the particular client. They can be very complicated with all the bells and whistles available. The quality of the insurance company is also important.
We just bought one for my 88 year old Dad. Of course he couldn't get the living benefit, however the death benefit is good. He is never going to need the money, yet a couple of the siblings were to nervous to just put it in the market.
With the death benefit the heirs are guaranteed either what the market does or the principal depending on which is higher. -
You bought a variable annuity for your dad? or the product that Indy is talking about?Originally posted by byu71 View PostComment
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If I read the article right, this is a variable annuity. It has what is called a "living income benefit". In reality and the article it seems refers to it as such later, it is a living or lifetime withdrawal benefit.Originally posted by scottie View Post
You can get various "riders" on the variable annuity. It isn't one we went with. In my Dad's case, the lifetime withdrawal benefit was not only not available because of his age, it wasn't something we were interested in. We have the death benefit "rider". Essentially we can invest in various mutual funds within the annuity and when my Dad passes the annuity will be worth whatever gains the funds made or the amount invested, whichever is greater.
It seems what may be new about this is that the annuity will wrap around "money managers" as opposed to selected mutual funds.
The appropriateness is dependent on the "need".Comment
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Financial regulation always lags behind financial instrument innovation.Comment
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incentives, incentives, incentivesOriginally posted by Katy Lied View Post
Te Occidere Possunt Sed Te Edere Non Possunt Nefas Est.Comment
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I am curious as to what you are saying. For the right situation, I personally think a variable annuity is an attractive investment vehicle. Even Suze Orman who trashed them on a show had some little old granny call in and ask her a question and Suze had to backtrack.Originally posted by Katy Lied View PostComment
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I just mean that every 15 years or so there will be a financial meltdown involving some abused financial instrument. Then the Feds come down hard and pass all sorts of legislation so that "this" mess never happens again. But the financial markets are too slippery and all that happens is that new instruments spring up that evade the regulatory net.
I dont mean to condemn this new instrument. I just marvel at how quickly new instruments take hold in the market.
PS: I share your sentiments of Suze. Plus, she has a horse face.Comment
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I agree with you here, except I think this crap comes along more frequently than every 15 years. I just don't know where the happy medium is. Proper regulation in a free market environment. Part of the problem I see is the regulators are as corrupt, maybe to strong a word, incompetent as the people who put together these crazy instruments.Originally posted by Katy Lied View PostComment
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This isn't exactly on topic, but I didn't think it was worth creating a new thread:
http://blogs.smartmoney.com/encore/2...ink=SM_hp_ls4eComment
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