New Annuity Guarantees Raise Questions

Gold Watch for RetirementThe latest products from insurers are less expensive. But regulators—and consumers—remain wary. With millions of baby boomers headed to retirement without old-fashioned pension plans as safety nets, here is a product that would seem to have big appeal: a guarantee of lifetime income from a portfolio of ordinary mutual funds—however long the investor lives and even if the stock market tanks. For years the life industry has sold income guarantees on variable annuities, but relatively high fees have limited the popularity of those products.  Now, insurers are starting to offer a cheaper guaranteed-income product that they hope will sell better. But there are lots of issues for potential buyers, including questions about cost—still—and the ability of insurers to fulfill the promises they make according to a recent report in the Wall Street Journal.