> FOCUS BY RAE HAMILTON
“Give me the money you have in the stock market, and I’ll make sure you have a stream of income for the
rest of your life.” If somebody offered that deal
to you, would you take it? You might be skepti-
cal, but it could be worth a second look. Such an
annuity, a product life insurance companies
sell, could bring some certainty to people
contemplating their retirements.
What is an annuity? Fundamentally, it
is a contract between an individual and an
insurance company in which the company
agrees to make a series of payments to the
individual in return for a premium or series
of premiums that have been paid.
Annuities have been around in some form
for centuries. Roman speculator and jurist
Feudal lords in the middle ages used annuities to cover the
cost of frequent conflicts with their neighbors. Annuities were
offered as a tontine, a pool of cash from which payments were
made to investors. As with most forms of insurance, participants
who beat the actuarial tables gained the most. The last living
member of the tontine received whatever was left in the pool.
A guide to annuities