Prudential's New Annuity Plan

Q: Have you had a chance to check into Prudential's new annunity plan that is called the "Guaranteed HD Lifetime Five" where it guarantees a minimum of 5% each year or the highest the market gains each year (whichever is highest)?

A: I am familiar with the annuity, there is a tremendous marketing campaign behind it.

But I don’t think it does what you think it does. It doesn’t guarantee a 5% annual return. It guarantees an income stream off of that ‘paper balance’. But if you don’t ever do the income stream, or if you stop it or cancel the policy before death, then the 5% ‘paper balance’ didn’t do anything…what you get back isn’t based on it but on the actual account balance less the withdrawals.

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