Most Reliable Insurance Company (SPIA for Retirement)

[EasternSierraEph]

In Your Opinion, which company (Ie, New York Life, Mass Mutual, etc etc) would most likely honor a Single Premium Immediate Annuity over the next 30 to 40 years in the event of a catastrophic great depression happening in that time frame?

PS: The two afore mentioned have the highest Moody's etc credit rating, but are there other real world factors that would go in to play in a worst case scenario?

PPS: I realize this type of question challenges/angers people uncomfortable of thinking about bad things or thinking outside the box. If that's you just skip this question. Thanks.

[bikechuck]

Your question is a good one for which there is no good answer. I think that the best things to do are

1) Check out their ratings which you have already done
2) Research the coverage amounts in you state of residence that are designed to protect annuitants from insurance company defaults and split your SPIAs between more than one company with each annuity at or below these amounts

[Wiggums]

This may help:
https://www.immediateannuities.com/insu ... y-ratings/

[EasternSierraEph]

Your question is a good one for which there is no good answer. I think that the best things to do are

2) Research the coverage amounts in you state of residence that are designed to protect annuitants from insurance company defaults and split your SPIAs between more than one company with each annuity at or below these amounts

California only insures $250,000 annuities total from ALL of your companies. So you could own $250K in New York Life and $250K in Mass Mutual. But you are only insured for $250,000 total.

[Uniballer]

California only insures $250,000 annuities total from ALL of your companies. So you could own $250K in New York Life and $250K in Mass Mutual. But you are only insured for $250,000 total.

OK, but if only one of them melts down then you will be better off than having just one SPIA with the one that failed.

[lawman3966]

While this doesn't directly answer your question, the below addresses the concern at issue here.

Walter Updegrave of CNN once recommended a diversification strategy for retirement investing that included annuities. He said to put 1/3 of one's assets into annuities and to further split that 1/3 of assets among three separate insurance companies. The other 2/3 of liquid assets could be kept in stocks and bonds.

The above is one approach to addressing the known concerns about stocks and bonds and the murkier types of risk that impact annuities.

[Stinky]

Both New York Life and Mass Mutual are extremely strong companies. Among the strongest in the life insurance industry.

I would feel comfortable buying a SPIA from either company.

[Arlington2019]

As a healthcare risk manager, I work with a lot of insurance companies and understand the AM Best and other insurance company ratings. When I bought my SPIA last year, I placed the coverage with New York Life. I could have gotten the annuity cheaper at other insurance companies with lesser ratings and financial strength.

[EasternSierraEph]

As a healthcare risk manager, I work with a lot of insurance companies and understand the AM Best and other insurance company ratings. When I bought my SPIA last year, I placed the coverage with New York Life. I could have gotten the annuity cheaper at other insurance companies with lesser ratings and financial strength.

Can one safely conclude that your high opinion of New York Life is based on previous positive experiences with them in terms of paying healthcare claims (or some other experience demonstrating New York Life's fair, claims-honoring, practice)? Ie, Do You feel they are a stand up company based on your work as a healthcare risk manager? Thanks in advance

[Pocanutin]

To add to what others have said, I have SPIAs with both Mass Mutual and New York Life for years (78 Years old)--purchased 12 years ago. No problems with either and based upon my experience, either one would be excellent...Not always the cheapest, but perhaps the best.

P

[ByThePond]

I notice that TIAA isn't among the list of insurance co. ratings. Can anyone put them in perspective with the others? Since that's who I went with a year ago...
Thx.

[Northern Flicker]

NY Life was the only insurance company with a top rating from all three major ratings agencies last time I checked. TIAA and Mass Mutual are close enough to that. I trust AM Best ratings the most if only one were used.

State guaranty pools usually cover $250K per person per company. Thus, don’t buy a SPIA from your casualty insurer. Maybe avoid buying from any casualty insurer. Don’t need earthquake and hurricane risk for the funds backing your SPIA.

I don’t believe that TIAA annuities in group retirement plans are eligible for state guaranty pool coverage.

[ByThePond]

NY Life was the only insurance company with a top rating from all three major ratings agencies last time I checked. TIAA and Mass Mutual are close enough to that.

State guaranty pools usually cover $250K per person per company.

I don’t believe that TIAA annuities in group retirement plans are eligible for state guaranty pool coverage.

Thanks.
In my state, NJ, the pool covers up to $500,000 in the payout phase, and individual plans like mine are included.

[capjak]

I would not go less than A rated on AM Best and perhaps a Comdex Ranking of 80 or greater.

[smectym]

>>>"...in the event of a catastrophic great depression happening in that time frame?"

With this clause embedded in OP's question, along with a 30-40 year time horizon, I don't think anyone can make any actionable forecast. Almost by definition, a "catastrophic" great depression could upend even the strongest insurance company.

The vagaries of planning through long future time horizons make it inadvisable to take irreversible steps with large amounts of money.

For this reason, as well as to curtail inflation risk, I favor consideration of the pros and cons of shorter fixed-term annuities--such as 10 years. That won't always be the right solution, but the default tendency on this board is to assume that only a life annuity should ever be considered. Life is the right approach sometimes; just not always.

Dividing the committed sum among two or three insurers is also probably a sensible step. We have fixed term annuities with two: Integrity and Symetra. We didn't select them because we thought they were the strongest possible insurers, but because they showed up in Vanguard's annuity service (since discontinued) as the best combination of insurer strength and a higher monthly payment than the competition.

[Arlington2019]

As a healthcare risk manager, I work with a lot of insurance companies and understand the AM Best and other insurance company ratings. When I bought my SPIA last year, I placed the coverage with New York Life. I could have gotten the annuity cheaper at other insurance companies with lesser ratings and financial strength.

Can one safely conclude that your high opinion of New York Life is based on previous positive experiences with them in terms of paying healthcare claims (or some other experience demonstrating New York Life's fair, claims-honoring, practice)? Ie, Do You feel they are a stand up company based on your work as a healthcare risk manager? Thanks in advance

NY Life does not pay healthcare claims, or if they do, I am unaware of it. My experience with NYL comes when I settle malpractice claims. Certain types of claims often have a structured settlement as part of the deal. Annuities are commonly used as part of that structured settlement. NYL is a big player in the annuity field for legal purposes. I have bought many, many legal annuities from them and they have always done an excellent job and passed muster with the Court. So from that standpoint, when it came time for me to buy a SPIA, NYL was one of the top contenders, even though I paid more to place it with them.

[wolf359]

I think the advice provided is the best you can do.
1) Pick among the highest rated.
2) Split your amounts among more than one.
3) Don't exceed your state limits on any one contract.

You're taking on single party risk with an insurance company. However, failures are rare. They can be quantified as generally 2-3 companies nationwide each year. Once in a while there is a terrible year, caused by stock market failures, earthquakes, or weather events.

If you're going the SPIA route, make sure you fully fund the biggest, cheapest, most reliable annuity out there -- maximize Social Security by waiting to file at age 70 for your biggest earner.

[EasternSierraEph]

If you're going the SPIA route, make sure you fully fund the biggest, cheapest, most reliable annuity out there -- maximize Social Security by waiting to file at age 70 for your biggest earner.

Very Good advice here. Thanks to all who commented. I feel retirement should be spent enjoying life, not managing a portfolio of $$$ or worrying about $$$.

I don't have much Soc Sec coming at all. In 8 years, I'll have 25 years service credit with California Teacher pension (CalSTRS Pension Fund is currently only 64% funded tho, and this is with optimistic assumed 7% returns)

I might possibly have a smaller California County Pension (That pension system is currently 72% funded) - working in my current Job.

I went all-in with my 401K (the day after the Tesla Cyber Truck window break) and put it on 200 shares of TSLA. Buy and Hold for the next 8 to 12 years. These 200 shares will form the funds for my SPIA in 10 years. I'm following in the same footsteps of a long ago retired colleague who put her entire 401K in AAPL stock when I told her index funds instead.

Fortunately she didn't listen to me, and kept her 401K entirely in AAPL. She was adamant. And yes, I am totally aware this is contrary to Bogleheads philosophy. But my teacher colleague taught me a valuable lesson: Go with your convictions. So I will buy more Tesla shares for the next 8 years, until they dont do stock splits at the price gets high.

[bikechuck]

NY Life was the only insurance company with a top rating from all three major ratings agencies last time I checked. TIAA and Mass Mutual are close enough to that. I trust AM Best ratings the most if only one were used.

State guaranty pools usually cover $250K per person per company. Thus, don’t buy a SPIA from your casualty insurer. Maybe avoid buying from any casualty insurer. Don’t need earthquake and hurricane risk for the funds backing your SPIA.

I don’t believe that TIAA annuities in group retirement plans are eligible for state guaranty pool coverage.

Might vary by state. I have not annuitized my TIAA Traditional but I will consider doing so in my mid to late 70s when I will have a higher benefit due to additional mortality credits. My TIAA wealth advisor has told me that if/when I do so the Ohio guarantee of $250K will apply.

[bikechuck]

If you're going the SPIA route, make sure you fully fund the biggest, cheapest, most reliable annuity out there -- maximize Social Security by waiting to file at age 70 for your biggest earner.

Very Good advice here. Thanks to all who commented. I feel retirement should be spent enjoying life, not managing a portfolio of $$$ or worrying about $$$.

I don't have much Soc Sec coming at all. In 8 years, I'll have 25 years service credit with California Teacher pension (CalSTRS Pension Fund is currently only 64% funded tho, and this is with optimistic assumed 7% returns)

I might possibly have a smaller California County Pension (That pension system is currently 72% funded) - working in my current Job.

I went all-in with my 401K (the day after the Tesla Cyber Truck window break) and put it on 200 shares of TSLA. Buy and Hold for the next 8 to 12 years. These 200 shares will form the funds for my SPIA in 10 years. I'm following in the same footsteps of a long ago retired colleague who put her entire 401K in AAPL stock when I told her index funds instead.

Fortunately she didn't listen to me, and kept her 401K entirely in AAPL. She was adamant. And yes, I am totally aware this is contrary to Bogleheads philosophy. But my teacher colleague taught me a valuable lesson: Go with your convictions. So I will buy more Tesla shares for the next 8 years, until they dont do stock splits at the price gets high.

Interesting ... a High Risk and potentially High Reward strategy ... too risky for me but I do hope that it works out well for you!

[EasternSierraEph]

Thanks