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02-09-2012, 05:16 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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Longevity insurance
While looking for information about annuities I found this website from the NYT about longevity insurance products. I have never heard the term before so would be interested in your view on this type of product. Thank you.
Longevity Insurance: Buying Down the Risks of Living Too Long - NYTimes.com
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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02-09-2012, 05:32 AM
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#2
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 16,710
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I read the article but found it confusing.
For example:
What is the difference between the regular policy and the much cheaper one that is just 'pure insurance'?
How does the inflation protection work, or not work?
Overall, while I like the idea, the article left me with more questions than answers. I guess its time to do some homework.
__________________
Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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02-11-2012, 11:08 PM
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#3
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Recycles dryer sheets
Join Date: Dec 2011
Posts: 388
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 Quote:
Originally Posted by obgyn65
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Thanks for the link. I will read up on NY Life's product. I am very attracted to longevity insurance products for several reasons. First, they appear to be the lowest cost way to transfer our longevity risk to an insurer. That's because they maximize the mortality credit which is most of the benefit. Second, they will never be popular because most people make the same mental accounting errors when considering them: they overvalue control; they evaluate it as an investment choice rather than an insurance choice; and they overestimate inflation. For these reasons, insurance companies are not likely to be able to charge a premium for these products, unlike, say, equity-linked annuities.
Of course, the best annuity is Social Security. So, I wouldn't buy such a product unless I already planned to delay SS until age 70 for the maximum payout.
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02-12-2012, 06:51 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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Last week I called a couple of annuity providers, including Hartford and NYL. One quote I have been given (for a $100,000 cost today) is, per month:
15yr.- $957
20yr.- $1439
25yr.- $2208
30yr.- $3598
39yr.- $10818
I am 46. To me these quotes are quite interesting but I would like to hear from other people views before making the jump...
Quote:
Originally Posted by Khufu
Thanks for the link. I will read up on NY Life's product.
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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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02-12-2012, 07:52 AM
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#5
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 20,656
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The déjà vu here is getting hard to keep up with, from only a few days ago http://www.early-retirement.org/foru...ies-59953.html
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No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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02-12-2012, 08:06 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
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This is longevity insurance, which in my mind, is quite different from traditional annuities. Please let me know if I am missing something.
Quote:
Originally Posted by Midpack
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__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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02-12-2012, 08:17 AM
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#7
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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Quote:
Originally Posted by obgyn65
This is longevity insurance, which in my mind, is quite different from traditional annuities. Please let me know if I am missing something.
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Well, they are both "longevity insurance", designed to give you income over a lifetime (assuming you don't go for specific term). The difference is when you actually "annuitize" (get payments)
It's not an SPIA (Immediate Annuity) but a deferred annuity (SPDA):
Single-Premium Deferred Annuity (SPDA) Definition | Investopedia
Both an SPIA/SPDA do have earnings, but an SPDA would have higher earnings since the entire amount is invested for a period of time before payments start, quite unlike an SPIA which starts paying you immediately and has a declining balance to invest.
I see it as a good option for those who want to plan for the future and reduce risk (assuming it's a fixed rather than variable annuity - just my personal opinion) by redirecting some of their current retirement investments subject to market flux into a future income vehicle; good for a "belt and suspenders" kind of person.
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02-12-2012, 09:02 AM
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#8
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 20,656
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Quote:
Originally Posted by obgyn65
This is longevity insurance, which in my mind, is quite different from traditional annuities. Please let me know if I am missing something.
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Just read the other thread, it's about longevity insurance...post #1 refers to a NYT article. Thought it might be of interest to you...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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02-12-2012, 09:32 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Posts: 1,934
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Since I first heard about longevity insurance I've thought it was an excellent idea.
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And if I claim to be a wise man, it surely means that I don't know.
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