Annuity Nightmare

Lindsey, James W.
January 1995
Journal of Financial Planning;Jan1995, Vol. 8 Issue 1, p18
Academic Journal
It is informed that most annuitants are horrified at the prospect of losing the difference between current account balances and cash-surrender values. So they have a tendency to sit tight and hope for the best. The individual retirement account annuities have various obscure deadlines which, if missed, means the policy owner automatically and irrevocably opts for the "Life with 10-Year Guarantee" settlement option. Most of the annuitants seldom keep up with such details and end up resigned to their -2.58 percent annual compound yields. However, most will not have the vaguest notion about the fairness of the income being received. Under conditions such as these, annuitants are certain to lose. In the long run good life insurance companies and good agents are certain to lose too. All these complications regarding the problems faced by annuitants was encountered by the author when he got the opportunity of working with a tax attorney who requested him to advice on several individual retirement account annuities owned by one of the clients.


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