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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75886  
Subject: Re: Income Planning Assumption Date: 6/7/2007 4:02 PM
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One other risk that never seems to be discussed: default tisk. "Guaranteed payments for life" are guaranteed only to the extent the insurer can pay them...much like interest on a corporate bond, which is also 'guaranteed', until the company files for Chapter 11. Now to be sure, this is a low risk with the large insurers like Hancock, Met Life or others....but its still a risk, and insurer defaults do occur.

This is all true, and I am not a fan of annuities in general (and am not necessarily advocating an immediate annuity for the OP), but the default risk on a highly rated insurance company is tiny in comparison to the default risk on stock and even still much smaller than the default risk on a bond.
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