We were sold an annuity with the promise of 6% interest and supposedly that was guaranteed forever? Were we conned? Could our annuity become worthless in 5 or 6 or 7 years? The current value of the annuity is down.
If a variable annuity has a term of four yrs and the market is bad can the annuity become worthless?
13
Mar
jeff410
March 13, 2010 at 2:31 pm
It probably wont become worthless. But it may not live up to that 6 percent either. Thats usually based on some assumptions. The same thing happened in the early to mid 90s when interest rates dropped so low.
Scorpio
March 13, 2010 at 3:23 pm
It is 6% guaranteed forever. Example: you put in 100k. 6% of that is $6,000/year. You can take an income stream of 6k per year. If the policy goes down to 0, then they annuitize the policy and turn on guaranteed income for life based on some other calculation which puts it right around the 6%, could even be more. You weren’t conned, the only issue is that if you ever want your money back in a lump sum in the future, you’re taking it at market value, which depending on withdrawals and market volatility, could be anywhere.