Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#76
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I have questions. Are annuities FDIC insured? If people stop purchasing them would the annuity company collapse from underfunding and would the current annuity holders take a bath? How does that work? (I know I could perform an internet search but it sounds as though we have many experts here regarding annuities and it appears annuity companies themselves can be very vague.) |
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#77
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I have received ~48 months of payments to the total of ~$26,000. So, by your reasoning, I should have a balance of $87,000, right? Please explain to me why my balance is now $111,000? Also, YTD return is 8.5%. Since the date of inception, the rate of return is around 5.5%. The minimum percentage is 4%. Now, I understand that they are paying me with the return on the investments, but I don’t care if they make money as well. If they didn’t, there would be no annuities.
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#78
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Dear Aces4:
Annuities are NOT FDIC insured. They are insured by the state in which the insurance company is domiciled. In the few instances that I am aware of, the assets of the insurance company that folded were purchased by another insurance company so there was no losses to policyholders. This has allowed the insurance company to say that no one has lost money in an annuity. I would caution, however, that if we have a total collapse in our economy, there is not enough money in any state's insurance fund to cover the losses of multiple insurance companies. Ditto, FDIC. Generally, there are two types of annuities--fixed in variable. With variable, which are basically tax-deferred mutual funds, you direct where your assets are invested and it is segregated from the insurance company's assets. In fixed annuities, the insurance takes your money and co-mingles it with everyone else's $ and makes the investments for you. If those investments go sour and the company folds, see the first paragraph. Underfunding is not an issue, in my opinion. |
#79
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When you give money to an insurance company, whether it be for a fixed annuity, immediate annuity, or to simply pay an insurance premium, that insurance company does not keep your money in an FDIC insured checking account, but invests it. Their three main investments are stocks, bonds, and real estate. So, if you are concerned about the financial health of the insurance industry, since each of these assets have performed above historical norms for several years, presently I would not be too concerned. Currently, interest rates that insurance companies are offering are in the low- to- mid single digits. The three asset classes of stocks, bonds, and real estate have done much, much better than that for several years. The difference between what they promised to pay you and what they earned on your money can be substantial and is their profit. You can invest in these asset classes directly, but you may lose money. So, simply put, an annuity investor is sacrificing decent gains for insurance company guarantees. Some call that peace of mind. |
#80
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Thank you for that succinct explanation. The difference between the federal government and the state insuring money is that one can print the money to cover the losses. History has proven that to be true. |
#81
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Google Lincoln Financial Investment reviews.
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#82
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I wonder if the Edward Jones brokers who own the house that sold for $1.041M in 2006 on Russell Loop and are having it torn down to build a two story mansion on the lake view site sell many annuities to their customers?
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"No one is more hated than he who speaks the truth." Plato “To argue with a person who has renounced the use of reason is like administering medicine to the dead.” Thomas Paine |
#83
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You are correct that the Feds can print money and the states cannot. As I mentioned, in the event of a total financial collapse. since insurance companies invest in stocks, bonds, and real estate, none of those assets are likely to go to zero and those holding annuities will receive some money back. In the case of FDIC with multiple banks going under, the Feds can "bail out" depositors by printing worthless currency. It has been suggested, however, that the more likely scenario is a "buy in" whereby depositors are given stock in the bank that went under. |
#84
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#85
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kathy |
#86
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#87
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#88
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Why in the world would anyone in their right mind go ahead with a contract they are not allowed to read before execution?
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#89
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I totally agree.
Last edited by retiredguy123; 09-12-2021 at 03:54 AM. |
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