credit risk of a fixed annuity

I'm a little confused of your use of the word "mature". Do you mean that the annuity has a guaranteed rate of interest for a specified time period and that time period is almost up? Or perhaps, the annuity had a surrender period that will soon be expired and thus you parents can move investments without penalty? Or do you truly mean "matured" as in the annuity value will be paid out like it or not? Typically fixed annuities function with both a guaranteed interest period and a surrender period.

Regardless, I took a look at a handful of single premium fixed annuities matrices and found a few respectable one's that offered 6+% guaranteed for 6 years with a 4.55% minimum interest rate after that period (Jackson National, Lincoln Benefit, MetLife & NY Life, namely). Honestly, I didn't look into the details/caveats, so make sure you perform your due diligence. Strangely enough, most of the attractive offers were 3,6, & 7 year guarantees. 5 yr looked the worst. I don't know why, but it was the case none the less.

Lastly, assuming the current annuity isn't automatically distributed, does it have a minimum interest rate floor and, if so, what is it?

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

I mean this.

Thanks for this information.

AIG, a big insurance company that offers annuities, among other things, has effectively been taken over by the Federal government to avoid bankruptcy. I have read that owners of annuities and life insurance policies should be safe. AIG has insurance subsidiaries that are strictly regulated. How much credit risk a fixed and immediate annuties have remains murky to me.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

IIRC, annuities are regulated by the state that they were issued in. There may be maximum annuity that is guaranteed by the state.

-- Ron

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

According to this document:

http://fic.whart>

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Good find. It's too bad that the guarantee limits in some states are as low as $100,000 with California only guaranteeing 80% coverage.

Fortunately, annuity providers are more financially responsible than banks, minimizing risk to the annuitants.

If one is going to buy an immediate fixed annuity then: One should be healthy (e.g. non-smoker, not obese, no chronic disease, etc.) Wait until interest rates on treasury bonds are high. Wait until age 70 to get maximum amortization of annuity for tax benefit. Don't buy more annuity than the state guarantee limit from any one vendor.

Although immediateannuities.com gives current annuity prices, it would be nice to have a calculator that gives the actuarial value of an immediate annuity contingent on the interest rate.

Another question is whether IRA, Roth, and 401k funds should be used to purchase an annuity.

-- Ron

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

The insurance agent told me that in Pennsylvania, where my father lives, the CD-type annuity he is investing in is backed up to $300K by a state insurance fund. The web site

the same number. It looks like the risk to his annuity, which isbeing issued by a AAA-rated insurance company and which is well belowthe $300K limit, is pretty remote.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

site

gives the same number. It looks like the risk to his annuity, which is> being issued by a AAA-rated insurance company and which is well below> the $300K limit, is pretty remote.

Agreed.

Here in AL we have "ALDIGA" which guarantees certain life insurance and annuities up to $300k death benefit and $100k surrender value. Each state is left to decide it's own coverage levels and requirements.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.