Insurance

Gowri Shankar of the University of Washington has published an article on the use of Treasury Inflation -Protected Securities ( TIPS ) and longevity annuities. Shankar suggests that a combination of TIPS and longevity insurance provides an optimal strategy when the objective is guaranteed retirement income . Shankar demonstrates that the combination affords the ability to sustain relatively high withdrawal rates while minimizing the probability of financial ruin in retirement. The strategy also...

The Pension Protection Act of 2006 created tax incentives for the creation of hybrid long-term care insurance policies. The Act also provides the basis for a tax free exchange of a life insurance or annuity contract for a long-term care policy. The exchange would be conducted through a Section 1035 exchange . Consumers and their financial advisors will be able to conduct such exchanges beginning in 2010. The details are complicated, but there is a good, in-depth article referenced below that...

Some of the world's largest asset managers are working on development of fund offerings that include features such as income guarantees or principal protection. In contrast to standalone living benefits, the new products would actually be embedded into a mutual fund offering. Firms such as Pimco, Russell Investments and John Hancock have expressed strong interest in and are actively developing such offerings. The availability of lower cost insurance features and regulatory complexities are...