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.”