Lehman Bros. bondholders will likely get zip.

Do you have some data for that? I have seen estimates of anywhere from 8¢ to 60¢ on the dollar, depending on what type of bond it is, and what assets are backing the bond.

The 100K limit (Florida) is per company so a risk averse annuity purchaser could buy a 100k annuity from multiple companies.

Similarly, a purchaser could buy a bond index fund, or individual bonds from multiple issuers, in order to spread the default risk.

It is an erroneous comparison to equate the risk of a buying a bond with the risk of an annuity purchase. The default rate of bonds is much higher plus there is no state insurance at all on a bond default.

Bonds can also be purchased with insurance, too (at a cost, of course). And while annuities may have lower default rates than bonds, you generally don't get your principal back with an annuity, like you would with a bond (assuming no default). So the costs of an annuity have to factor loss of principal into the cost, too.

It's all in cost vs. risk. And just saying that because annuities have a lower default risk is only looking at one side of the story, since there are additional costs.

AJ