Conspiracy against Annuity
Sonjai Kumar, CFIRM, SIRM, Certified Risk Management Professional, IRM
PhD Scholar in Risk Management
Another ridicules article entitled “Buying Annuity? Think Again!” written by Raj Pradhan published in “Money Life”.
The author does not have an idea about the purpose of annuity and what are the key features of annuity such as long term coverage till life and life insurer taking the longevity risk.
On the contrary, the author is incorrectly comparing the annuity with “Liquidity” which is not the purpose of the annuity, Comparing annuity with FD, not knowing that the purposes of FD is short term deposit while annuity is long term with guarantees of the rate , talking about taking Loan against annuity ( Oh my God). Guys, common, if you do not understand the product, please do not confuse the public with quarter baked knowledge.
This is the second article I have read against annuity over last two weeks, prompting me know say that such Authors should be questioned by the Insurance industry propagating false information to the public.
Guys lets join hand against such authors those who are not giving right information to the public and publicizing wrong information.
Principal at Mercer
8 年Agree that the importance of annuities in India is grossly under estimated. Specially with no DB pension plans and with no guaranteed income at retirement, people might realise the importance a bit too late. However, I wonder how the pricing of annuities in India compare to other markets. For example, in US I see the underlying discount rate on bulk annuities to be in the range of 3% to 4%. Typically that's the yield on long US Govt bonds. Compare that with an inflation of around 2% and an expected economic growth 2.5 to 3%. All these numbers tie up quite well. More than a decade ago when I worked in a life insurance industry in India, these numbers didn't quite add up and one could understand why annuities didn't sell. Not sure about the current annuity market though. But I agree there is a lack of awareness too. I tried reading this article online but it seems its a paid website!
Seasoned Risk Practitioner | Enterprise Risk Management | Insurance | Actuary | Governance | Distribution Operations
8 年Relevance of annuities is only going to increase with every passing year even for a country like India which has a relatively low average age currently.