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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75381  
Subject: Variable Annuities beware of broken promises Date: 6/25/2013 3:49 PM
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Wall Street Journal has article today that insurance industry has seriously underestimated the cost of the lifetime guarantees they have made with variable annuity contracts.

I presume this means clauses that guarantee minimum values when you annuitize the contract and agree to accept lifetime payments in lieu of the cash value of your investments.

Moody's has concluded that many life insurance companies are under funded. They are responding by modifying the contracts. In one example, contract owner was required to select a bond fund investment option or lose his guarantee. The article mentioned specifically Hartford.

The implication is that insurance companies who have offered guarantees with their annuity contracts may not be able to keep those promises.
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