Annuities are sold by regular insurance salesmen or brokers
Annuity Brokers
Have any readers here used an Annuity Broker to purchase an annuity? Were you happy with there service? Are there any annuity brokers that you would recommend? I live in Ottawa.
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That article was interesting. It mentioned a 10% number that I presumed meant that the buyers of annuities experienced death rates each year 10% less than the tables of total populations. It also indicated that 5% was needed for costs and/or profits. If that is still so (article is old) then I would not be buying Life Insurance Companies.
I found a mortality table that is out of date, so longevity will be longer now. I played with it in a spreadsheet with the idea of pooling with some friends in a club, the $$ we would have in Gov debt anyways. It would pay out the current debt's yield and increase it with inflation. When we reached 100, the remaining pool would be split between everyone/heirs prorated by how much they had already been paid while living.
I found that simply breaking even was VERY touch and go. Simply assuming the buyers would be the healthy people, and so using the death rates from the next younger group, was enough to wipe out solvency. Forget giving the administrator any 5% fees.
I found a mortality table that is out of date, so longevity will be longer now. I played with it in a spreadsheet with the idea of pooling with some friends in a club, the $$ we would have in Gov debt anyways. It would pay out the current debt's yield and increase it with inflation. When we reached 100, the remaining pool would be split between everyone/heirs prorated by how much they had already been paid while living.
I found that simply breaking even was VERY touch and go. Simply assuming the buyers would be the healthy people, and so using the death rates from the next younger group, was enough to wipe out solvency. Forget giving the administrator any 5% fees.
The idea that "It is not the best time to buy an annuity now" has often been said in the media. But the quotes are not different from historical quotes. You can see multiple year's quotes following. Sometimes you have to e-mail them to ask for an update.
http://www.ifid.ca/payout.htm
http://www.ifid.ca/payout.htm
Two of the posters above seem to looking at these products as a way to offload the risk of doing their own investing. They will not do that, so forget it.
The major reason is that their 'benefits' come from the deaths of your age cohort with which your money is pooled. When you are young, not enough of you are dying to provide any benefit. It is only after 65 or 70 that we start dying fast enough to provide any benefit.
In the interim before that happens, and after you buy the product, the insurance company is draining the kitty, paying out more than they are currently earning. They accept this risk knowing that soon the deaths will start piling up and they can play catch up.
When you buy an annuity any time younger than 65 they have to accept the risk of such a long, long time before breaking even, that they price the products to firmly discourage you from buying.
The major reason is that their 'benefits' come from the deaths of your age cohort with which your money is pooled. When you are young, not enough of you are dying to provide any benefit. It is only after 65 or 70 that we start dying fast enough to provide any benefit.
In the interim before that happens, and after you buy the product, the insurance company is draining the kitty, paying out more than they are currently earning. They accept this risk knowing that soon the deaths will start piling up and they can play catch up.
When you buy an annuity any time younger than 65 they have to accept the risk of such a long, long time before breaking even, that they price the products to firmly discourage you from buying.
The comment: (the payout is) "certainly higher than any kind of conservative fixed income products available" shows you don't understand the product yet.
The payments include a return of capital. You should not consider it income. Buy a financial calculator and learn to use it. Assuming you live for ...
40 years, your rate of return would be 5.6%
35.................................................5.3%
30.................................................4.8%
Of course you get longevity insurance on top of that. But still if you presume a reallllly long life span you are still only getting about 6% return. There are preferred shares that pay that amount, and keep your principal free for big expenses when sh.. happens.
The payments include a return of capital. You should not consider it income. Buy a financial calculator and learn to use it. Assuming you live for ...
40 years, your rate of return would be 5.6%
35.................................................5.3%
30.................................................4.8%
Of course you get longevity insurance on top of that. But still if you presume a reallllly long life span you are still only getting about 6% return. There are preferred shares that pay that amount, and keep your principal free for big expenses when sh.. happens.
1 - 5 of 38 Posts
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