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Author: rclaussen Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2122922  
Subject: Re: Even now, weeks after the election … Date: 12/13/2012 10:28 AM
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Hi Grape,

“You can always purchase an annuity if you want steady income.”

Yes, that is possible – for a price. What is the price and what are you getting?

Annuities are complex contracts written by insurance companies. Here is a comment taken from one of the links I will provide for you to delve into the complexity and cost of annuities:

“Calling payments from an annuity "income" is a grave misnomer. In fact only a tiny piece of each payment is "income" and the balance is a return of your principal. It is misleading at best to attribute funds paid to the extra cash earned by insurance company on policies where owners die early. Tell the truth, you are mostly getting your own money back after paying hefty fees and commissions.

Another critical piece of information which the buyer should have is how much the salesperson would earn for selling the product. Wouldn't a 10% commission paid be useful information to have?”

The timing of your comment is appropriate. Morningstar provided a well rounded discussion of annuities this week. Below are links to the articles included in the discussion, some of which include additional links and comments from Morningstar members. They are available for you to read and create a more informed decision should you decide to purchase an annuity at some point in time.

I have my own opinion of annuities having been in the insurance industry at one time. But my opinion is not what counts. It is what you can learn from balanced sources in becoming a more informed consumer.


http://news.morningstar.com/articlenet/article.aspx?id=57806... Is an Annuity Right for You?

http://www.morningstar.com/Cover/videoCenter.aspx?id=577943 How to Survey the Changing Annuity Landscape

http://news.morningstar.com/articlenet/article.aspx?id=57805... 4 Strategies for Combating Low Annuity Yields

http://news.morningstar.com/articlenet/article.aspx?id=57806... How Are Annuity Payments Taxed?

http://www.morningstar.com/Cover/videoCenter.aspx?id=382417 Five Questions to Ask Before Purchasing an Annuity

http://news.morningstar.com/articlenet/article.aspx?id=36754... Pros and Cons of Guaranteed Income Streams

http://news.morningstar.com/articlenet/article.aspx?id=35172... The Error-Proof Portfolio: For Annuities, Timing Is Key
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