No. of Recommendations: 2

I can attest that aj485 knows what she's talking about here. Not only do I have some background knowledge of annuities since my father used to sell them (I worked in his office some summers in my youth and he repeated tried to get me interested in taking over his business after I got older); but aj485 and I just went through this with my mother, an eldercare attorney and Medicaid just 2 years ago.

aj485's assertions are spot-on. A period-certain annuity pays out for at most the specified term. Notice I said at most? In other words, without an additional rider the annuitant's estate will not receive any unpaid funds from the annuity. This could make the annuity's total return appear to be superior to other fixed income options - but that's only because the analysis often doesn't take into account the risk that the balance of the premium could be forfeit to the insurer. If you take proper account of the mortality risk, these annuities are pretty lousy "investments". But I suppose you might be able to make some kind of argument for them as income insurance ... or just a means of asset protection in case of Medicaid.

- Joel
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