You're gonna die!

Here's to you, Frank Cross--you're gonna die!

One of our members was interested in annuities, particularly joint with beneficiary annuities which would pay out a lump sum after you and your spouse kick it. This article and audio clip from NPR is a nice primer. There are a few types of annuities, but you can look at them as private pensions of a sort.

With a fixed annuity, you pay in a lump sum, and receive payments later for some agreed-upon interval (usually the rest of your crummy life). The variable annuity is a mutual fund-type of account, with an insurance aspect, where you invest and the yield of your investments is the basis for the amount of your payments. One of the big issues with a variable annuity is the high level of fees you pay out combined with the fact that you are also not getting the tax benefit of something like an IRA. A bad deal, indeed. 

 

For further reading, we're told you could check out Pound Foolish: Exposing the Dark Side of the Personal Finance Industry. Since this is an insurance product, there is an element of gambling to this. If you live longer than the annuity provider thinks you will, you win. You have to keep in mind that any insurance product is designed so that the insurance company gets more money coming in than they pay out. However, if you pay into it and die "early" they win. As with anything, you need take into account who you are (personal habits, health, etc.) and the responsibilities you do or don't have to others after you join the Choir Invisible. A common theme with annuities is that they are a fairly final decision, due to the penalties and fees if you try to back out early. 

It used to be that you took care of grandma, but with the Baby Boomer generation there was a shift toward leaving your children money. The other side of that shift is that possibly the younger generation might be less concerned with helping grandma and more so with how much their going to get. Ultimately, this is a practical link to your philosophical outlook and is some heavy stuff indeed. 

For next week, more investment analysis.

Profit!