Monday, February 18, 2013

Annuity is also about viability of the company

I was recently reading about annuities and it struck me that most seem to be more intent in looking at the yields of the plan, but few seem to be focusing on the sustainability of the plan.

What is the objective of annuity plans? Simple. It's about hedging the risks that you will live longer than expected. Therefore, I'm surprised that people are not looking at the sustainability of the company offering the annuity plans.

This should be first and foremost the first thing in your mind. Is the annuity plan sustainable? Is the annuity model able to withstand the test of time? Will the company still be around when I'm old?

Whatever product that you purchase, you should not forget the objective of purchasing it. What is the intent. What is it hedging against. Yield is important, but it's not everything. It's no use going for a product that gives you 8% yield, but unsustainable.

1 comment:

personal pension plans said...

You have your version of annuity. I have all the right to agree or disagree with it. I've my own conviction about annuity.

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