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Actuarial Group Posts Individual Annuity Guide

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Annuity experts have published a new guide to the most popular types of individual annuities available in the United States today.

The Lifetime Income Risk Joint Committee — an arm of the American Academy of Actuaries — posted the issue brief on the academy website late last month.

Actuaries are people who have taken tests to prove that they understand the kinds of math needed to analyze insurance and pension risk. The American Academy of Actuaries is a group that helps actuaries communicate with federal, state and local policymakers.

What It Means

The authors of the new guide are hoping that advisors and others will use it to get short, clear, accurate annuity product descriptions.

”Having a clear understanding of annuity types is important to personal finance writers, advisers, and retirement plan actuaries who serve defined contribution plans,” the authors write in the guide.

The Guide

The authors of the guide focused on common types of income annuities and deferred annuities, including single-premium immediate annuities and deferred income annuities on the income annuity side, and fixed annuities, fixed indexed annuities, variable annuities and registered index-linked annuities, or RILA contracts, on the variable annuity side.

The authors did not talk about group annuities, or about some relatively unusual types of individual annuities, such as contingent deferred annuities or the annuities used in structured settlements.

When the authors describe RILA contracts, they note that the products can also be called structured variable annuities.

U.S. life insurers began selling RILA contracts in 2010. State regulators are writing RILA actuarial guidelines now, and it’s possible that the new guide could affect how regulators, legislators and other policymakers think about the different annuity product types.

Other Resources

Publications like ThinkAdvisor have published informal retail annuity guides, and the Alliance for Lifetime Income has posted an annuity glossary.

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