Do True Annuities Exist in Thailand?

[AyG]

I know that a number of insurance companies offer products which they call "annuities" which involve saving for a few years up to a certain age (typically 55 or 60), and then getting a guaranteed income starting later in life. I was wondering, however, whether there were any real annuities available, whereby one pays a single lump sum and then immediately secures a fixed monthly income for life (either flat, or rising). Then, when you die the annuity is worthless. Does anyone know of any such products here?

Thanks.

[Pinot]

They certainly exist everywhere else and annuities are always a bad idea. See a financial adviser for some advice.

Google "annuities bad idea."

[AyG]

They certainly exist everywhere else and annuities are always a bad idea. See a financial adviser for some advice.

Google "annuities bad idea."

I wasn't asking for an opinion on whether annuities were a good or bad idea. I am perfectly capable of making my own decision about that. I did however want to find out whether they were available in Thailand. My research so far suggests not.

Still, thank you for your contribution, however worthless.

[Suradit69]

The reason insurance companies offer annuities is because they are profitable for the insurance company and guess at whose expense.

Annuities come in different flavors even outside Thailand. Not all "real" annuities evaporate when you die or begin making payments immediately.

1. There are two basic types of annuities: deferred and immediate. With a deferred annuity, your money is invested for a period of time until you are ready to begin taking withdrawals, typically in retirement. If you opt for an immediate annuity you begin to receive payments soon after you make your initial investment.

Edited April 26, 2015 by Suradit69

[Misty]

They certainly exist everywhere else and annuities are always a bad idea. See a financial adviser for some advice.

Google "annuities bad idea."

Not entirely true - it depends on the type of annuity. The type of annuities that some financial advisers might say are a bad idea are called variable deferred annuities. These are the kind that have a contribution period in which savings are invested by the insurance company before they "annuitize" or start to pay out a return. The reason these are often called a bad idea is that the insurance company subtracts high fees during the savings period. Better to save and invest outside of such a structure.

But not all annuities are called a bad idea by financial advisers. For example, a fixed immediate annuity - perhaps the kind the OP is asking about - can make sense for some people. Sometimes this type of annuity is referred to as longevity insurance. However, fixed immediate annuities are priced based on interest rate levels. Right now with global interest rates so low it might make sense to wait to purchase such a thing if you can - you'd get a higher payment when rates are higher.

Like the OP, I don't know of any fixed immediate annuities offered in Thailand. They may exist, I've just not heard of them being sold here.

[DogNo1]

An annuity is only as good as the insurance company which issues it. If the insurance company fails then your annuity is worthless. There is a variety of types of annuities available. Google 'annuities" and you will get lots of hits. There are online calculators that will allow you to calculate your monthly benefit from various principal amounts whether paid in over time or as a lump sum. I own an annuity but have elected to keep most of my funds invested in income securities for the benefit of my heirs. Be aware that there is a hefty upfront fee charged for any annuity but this is disguised through the payout calculation which doesn't reveal what percentage of your money is eaten away by the upfront fees. Seriously, depending on your age, you can probably do better by taking the interest paid on a Thai savings account and drawing down your principal over time. A series of time deposits is possible, making sure that you always have a year's income liquid. Of course, if you're leaving the annuity for a Thai dependent and you want to make sure that the money will only be paid out in monthly payments, then an annuity makes sense but it will cost you that upfront money. Good luck.

[AyG]

Seriously, depending on your age, you can probably do better by taking the interest paid on a Thai savings account and drawing down your principal over time.

I'm looking into this for an elderly person who wants a secure income for life, has no one to leave an estate to, and wants as simple a solution as possible.

Based upon the person's age, a UK annuity, rising at 3% per annum would initially yield around 4.5% which would be more than sufficient for the person's needs based upon current expenditure. However, there's the GBP/THB exchange rate risk. I need to find a way to mitigate that. A THB-denominated annuity with a similar yield would be ideal, but I'm rather doubting such a beast exists.

[KKr]

If you look at the Thai Farmers bank website under annuitities, you will find what I think you are referring to.
It looks interesting, however I did not check the details and eligibility of the product yet.

[AyG]

If you look at the Thai Farmers bank website under annuitities, you will find what I think you are referring to.

It looks interesting, however I did not check the details and eligibility of the product yet.

I presume by "Thai Farmers Bank" you means Kasikorn. (Haven't heard it called that for a long time.)

And by annuities, I presume you mean their "Pro Annuity" offerings, both of which involve paying money in regularly when you're less than fifty to get an income later in life. Sadly not what I'm looking for. The person I'm looking into this for is already way over 50.

Thanks for the try, though.

[NoshowJones]

The reason insurance companies offer annuities is because they are profitable for the insurance company and guess at whose expense.

Annuities come in different flavors even outside Thailand. Not all "real" annuities evaporate when you die or begin making payments immediately.

1. There are two basic types of annuities: deferred and immediate. With a deferred annuity, your money is invested for a period of time until you are ready to begin taking withdrawals, typically in retirement. If you opt for an immediate annuity you begin to receive payments soon after you make your initial investment.

Only one thing to say here, and it is not only specific to Thailand "never trust men in suits".

[Srikcir]

I would think that unless you have Thai sourced income (ie., Thai employment, distributions from Thai stocks & bonds, Thai Bank CD interest), you will not be able to avoid the GBP/THB exchange rate risk and possible transfer fees. Also, an annuity is not necessarily secure as it may be cashed out through sale to a third party.

I know you have decided on a Thai annuity for an income stream. But a Thai real estate investment trust might generate both distributions and capital appreciation that could far exceed a 4% p.a. return.

[AyG]

I know you have decided on a Thai annuity for an income stream. But a Thai real estate investment trust might generate both distributions and capital appreciation that could far exceed a 4% p.a. return.

As previously explained, the elderly person concerned is only interested in getting a 100% secure income stream for the rest of life, and has no interest in capital having no one to leave money to following death. A Thai REIT, whilst possibly short term providing a higher income, simply does not have the secured income of an annuity. Furthermore, 4% (increasing in line with inflation) would comfortably meet the person's lifestyle's financial expenditure - no need for any more than this, and certainly not at the cost of loss of security of income.

[abrahamzvi]

They certainly exist everywhere else and annuities are always a bad idea. See a financial adviser for some advice.

Google "annuities bad idea."

Not entirely true - it depends on the type of annuity. The type of annuities that some financial advisers might say are a bad idea are called variable deferred annuities. These are the kind that have a contribution period in which savings are invested by the insurance company before they "annuitize" or start to pay out a return. The reason these are often called a bad idea is that the insurance company subtracts high fees during the savings period. Better to save and invest outside of such a structure.

But not all annuities are called a bad idea by financial advisers. For example, a fixed immediate annuity - perhaps the kind the OP is asking about - can make sense for some people. Sometimes this type of annuity is referred to as longevity insurance. However, fixed immediate annuities are priced based on interest rate levels. Right now with global interest rates so low it might make sense to wait to purchase such a thing if you can - you'd get a higher payment when rates are higher.

Like the OP, I don't know of any fixed immediate annuities offered in Thailand. They may exist, I've just not heard of them being sold here.

I agree with what you are saying regarding this being the wrong time to purchase a longevity insurance in view of the very low interest rates. However, may I suggest to the OP to try the AIU, who should be able to quote.

[AyG]

However, may I suggest to the OP to try the AIU, who should be able to quote.

I presume you mean AIA. Looking at their website, again it appears their products fall into the "save for a number of years whilst you're younger, get some money back when you're older" category, as do all the Thai products labelled "annuity" that I've looked at so far.

I suspect I'm looking for a needle in a haystack that doesn't even have a needle.

Thanks for the try, though.

[DogNo1]

I suspect that the exchange rate risk and money transfer fees might be counterbalanced by the security of having the annuity in the UK. An alternative could be putting the money into a balanced portfolio of income securities. Richard Lehmann in Florida, USA manages portfolios for 1% on the first million. It's not as simple as having an annuity but the elderly person could earn around 5% on a low-risk portfolio leaving the principal untouched. That would be a tremendous advantage in the event of exchange rate fluctuations because the principal could then be tapped. Lehmann is my portfolio advisor. Any security that he would recommend would be available on the London Stock Exchange. Your elderly friend could make an arrangement with Lehmann (or any number of other advisors) to have a certain monthly amount put into his Thai bank account. It is a bit more complicated to set up, but you or your friend could discuss the portfolio and payout with Lehmann (or another advisor) over the phone. There is a bit more risk involved in having a portfolio of income securities but the advantage is that the principal doesn't disappear as it does with an annuity and is there for emergencies. Incidentally, if you check the quotes for period-certain annuities in the USA, I think that you will find that it is possible to receive around a 7% monthly payout on the money paid in for an immediate annuity, which is what you are talking about. The downside is that the money vanishes when the annuitant dies. With your friend, that doesn't appear to be a concern.

In the USA, Vanguard is an excellent source for information about annuities. See https://investor.vanguard.com/annuity According to Vanguard, a 65-year-old person can get $1,000 per month for life by putting $167,105 into an income annuity. That's a 7% payout. The money would vanish when your friend dies and would not be there to tap for emergencies. If your friend does not have health insurance, an emergency fund would seem to be necessary.

Good luck in finding the appropriate solution for your elderly friend. If you want to take a look at Lehmann, his website is incomesecurities.com.

[hhgz]

Yes, "true annuities" exist in Thailand.

[Misty]

In the USA, Vanguard is an excellent source for information about annuities. See https://investor.vanguard.com/annuity According to Vanguard, a 65-year-old person can get $1,000 per month for life by putting $167,105 into an income annuity. That's a 7% payout.

In the US, low cost fixed income annuities are available - albeit denominated in USD - at competitive prices. Unfortunately however, I haven't seen a US insurance/annuity provider willing to sell an annuity to someone living in Thailand. Would you happen to know if that's changed or if Vanguard is an exception?

[DogNo1]

Vanguard doesn't actually sell the annuities but has links to various insurance companies that do so you can do price shopping. I don't know if a US annuity can be sold to a person living in Thailand but I'm sure that the really biggies such as AIG and Prudential have linked or subsidiary companies in Thailand. The Vanguard page is very friendly. Check it out. It will be a good starting point for further research into what companies sell annuities outside of the US and what the residence requirements are. Good luck, although I don't recommend annuities for anyone with a little investment savvy and initiative. There are better options available.

[Misty]

Vanguard doesn't actually sell the annuities but has links to various insurance companies that do so you can do price shopping. I don't know if a US annuity can be sold to a person living in Thailand but I'm sure that the really biggies such as AIG and Prudential have linked or subsidiary companies in Thailand. The Vanguard page is very friendly. Check it out. It will be a good starting point for further research into what companies sell annuities outside of the US and what the residence requirements are. Good luck, although I don't recommend annuities for anyone with a little investment savvy and initiative. There are better options available.

Thanks DogNo1. Based on past research the types of products being sold in Thailand - even by the types of international firms that you mention - are not nearly as competitive nor as attractive as what is advertised to US residents on the Vanguard site.

If anyone knows of fixed immediate annuities available in Thailand please post. But at this point the market here simply seems to be at a different level of development. As the market evolves in time hopefully we'll see better solutions in this area. Until then it can be a bit frustrating for folks looking for solutions to see what they might get elsewhere but are unable to source locally.

Edited April 28, 2015 by Misty

[Hideout]

Standard Chartered in Thailand offers annuity plans.

PS These may not be in the form of "true" as I believe they have a life insurance aspect to them but may be worth looking into.

Edited May 1, 2015 by Hideout