An Argument Against Annuities

There are two broad categories of annuities. There are the simple annuities. These are immediate annuities, longevity annuities, and fixed deferred annuities. These classic, old-fashioned annuities are straightforward, easy to understand, and pay low commissions to agents and brokers. These usually are the ones I recommend in certain situations, especially to generate guaranteed income for life.

This article discusses the other kind of annuities, complicated one with a myriad of terms that aren’t intuitive. The article says that an assortment of math teachers weren’t able to understand the terms of contracts for these annuities. It’s a good reason not to buy them.

Ms. Lindert could have asked her fellow teachers in the math department for advice, though she probably would not have received any solid answers. When Patty Hill, an algebra teacher in Austin, looked over Ms. Lindert’s latest contract from the Life Insurance Company of the Southwest for The New York Times, she was just as befuddled. And downright angry.

“The document is filled with jargon, but at the same time, it is mathematically ambiguous,” said Ms. Hill, who recently received the Presidential Award for Excellence in Mathematics and Science Teaching, a prestigious award bestowed by the White House in August. “It is not being transparent there that is infuriating to me as a mathematician.”