Longevity Insurance In The News
Longevity Insurance is one of the best ways to guarantee lifetime income AND take advantage of the higher yields offered by Secondary Market Annuities. It works like this:
Assume we are talking about a 65 year old California man with $1M assets who need $5000/ month for his essential living expenses
Step 1: Purchase a lifetime income guarantee policy, sometimes called Longevity Insurance, to give you enough income but starting at age 85. Rates vary regularly but recent quotes for a 65 year old California man paid over $6000/ month per $100,000 of premium.
Step 2: Now that the lifetime income/ longevity risk of outliving income is taken care of, the remaining $900,000 in assets can be positioned for maximum yield to last a defined period of time. And Secondary Market Annuities are the single best way to get a high yield in a guaranteed, fixed term investment.
With longevity – the biggest unknown – out of the way, the rest is easy!
We have relationships with the major carriers in the longevity marketplace, so if this strategy strikes a chord with you, please give us a call. We can make it happen.
Here’s a recent WSJ article on the topic as well:
In recent months, insurers including Massachusetts Mutual Life Insurance, Northwestern Mutual and New York Life Insurance have introduced these products.
In February, the Treasury Department issued a proposal to make it easier for people to buy so-called longevity insurance products—which start payments at, say, age 80 or older—in 401(k) and individual retirement accounts.
Economists say it can make sense to put a small portion—for example, 10% to 15%—of your nest egg into such a policy upon retirement to protect yourself from running out of money from age 80 or 85 on. But insurers including New York Life and Northwestern Mutual say that with pension plans falling by the wayside, a growing number of buyers are purchasing these policies in their 50s as a way to secure a pension substitute in their 60s and beyond.
“In 2008, people saw their 401(k) balances get decimated. Now, they want certainty,” says Tim Hill, a consulting actuary and principal who specializes in annuities at actuarial consulting firm Milliman.