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Thursday April 24th 2014

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Insurers to Annuity Owners: We Don’t Want More Money

nesteggSome insurers are telling owners of annuities they can no longer add money to older contracts with the richest guarantees. It isn’t often a business says, “Thanks, but no thanks,” when you try to invest more money with it. But that is what a growing number of life insurers are saying to people who, years back, bought the retirement-income product known as a variable annuity, a tax-advantaged way to invest in stock and bond funds. Many were sold with guarantees of steady income for the buyer’s lifetime, even if the fund accounts become depleted—and these generous promises are the focus of insurers’ moves. At least five big insurers have advised annuity owners over the past 16 months they won’t accept, or are restricting, additional money destined for older contracts with the richest guarantees. according to a recent report that ran in the Wall Street Journal.