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Grave Concerns about Annuity Survival

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I have grave concerns about the survival of annuities. I like what Dennis Beaver writes at the Hanford Sentinel:

For anyone thinking of moving a large amount of money from a retirement account into an insurance annuity at this time, it could be a terrible decision.

“You’ve got to think this over very carefully. Do not be conned by a salesman looking only for a huge commission on the sale of an annuity, and, absolutely do not put all your eggs in one basket!” warns New York attorney Edward Stone.

As one of a handful of lawyers in North America who specialize in life insurance/annuity company failures — that’s right, failures with policyholders suffering huge losses — Stone’s advice merits serious attention, especially now.

As he explained:

“Insurance companies are in a near-zero interest rate environment which is a very real threat to their ability of honoring promises to policyholders. How can they continue to guarantee rates of return that exceed actual returns on their investments? Either you rob Peter to pay Paul or chase risk or some combination of both.”

He is not alone with this warning. In April of 2015, Laurence D. Fink, CEO of BlackRock Inc., the world’s largest asset manager, addressed the reality of what low interest rates mean to the survival of life insurance companies:

“Low interest rate policies by central banks around the world threaten insurance companies and pension funds. As we live in a world of persistent low rates and negative rates, we are destroying the value of pension funds [and] the viability of insurance companies.”

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.

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