Annuities

In this article Money Sense is talking about Annuities.

I worked in IT in a couple of insurance companies that issued Annuities. They used to be a lot more popular when interest rates were historically normal, which they have not been for some time. Annuities paid interest so they were not popular when interest rates were very low or non-existent.

Annuities used to be popular for a good reason. You had assured income for life. Mostly we sold annuities with a 10 year guarantee. If you have no guaranteed period, you could die shortly after purchasing one and all the money paid belonged to the insurance company. If you had around 10 year guarantee, which means that the annuity paid out for a minimum of 10 years. If you died before the 10 years were up, your beneficiaries got the money. A 10 year guaranteed basically insured the insurance company paid out about the amount that the annuity cost.

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