Annuity is a financial instrument which pays out guaranteed fixed amount of money someone every month/year, usually until their death.
The solution posted here is a perpetual income plan which gives out dividend payout at the end of 2nd year for life and a guaranteed coupon payout at the end of 12th for life. The breakeven year is 10 years. If you cash in anytime before 10 year, you will suffer some lost. eg, 22% lost if you cash in on the 8th years. The complete table of return and lost will be disclosed to you before a contract is sign. This plan is available for age 1 to 100.
Imagine if you have US$150k sitting around doing nothing, and you have a 1 year old son. You can buy the lifetime annuity with your son as the life insured, and starts to withdraw lifetime dividend at the end of 2nd year plus guaranteed coupon on the 12th year. You may choose to give the income to your son anytime or keep it for yourself till you pass away. After which, you son will receive the lifetime income till he pass away. And your grandchildren will have inherited more than US$200k if you son pass away at 90 years of age. In total, you and your son will enjoy lifetime income plus death insurance of more than US$200k for your grandchildren. This is the concept of 3-generation insurance.
Instead of lump sum payment, if you have US$2k a month to spare, after paying for 8 years, you are on your way to receive your lifetime dividend at the end of 2nd year and guaranteed lifetime yearly income at the of 12 years.
Another type of lifetime annuity is only available to a person age between 55-60. The monthly income payout is fixed at age 62. For the initial sum of US$150k, your monthly guaranteed life income will be US$850. If you decided to cash it in before age 62, the lost suffer is 2%. If the person insurred pass away before he has received more than his initial investment, the balance plus interest will be returned to his estate. If the life insured live till age 85, he would have received total income of US$240k. The minimum sum to buy this annuity plan is S$20k using cash or your CPF fund when you reach age 55.
thanks
KC
[email protected]*life insurance is a form of financial tool gives out death compensation*
*endowment is a fomr of savings plan gives you a discipline to save plus a moderate return*
*endowment saving plan also have penalty if you choose to stop saving before the term ends*
*if u can save yourself and ok with the interest earn, 0.015%, dont buy endowment and please dont complain about endowment*
*if you can get better return from your own investment, insurance plans may not be the right financial tool for you. so please don complain*
*everybody has diff risk preference in handling their finance*
*if you have S$10mil, dont buy insurance, cos you can self-insured*
*if you have S$100k, better buy*
*if you have only S$10k, better save now*
*try not to use personal credit, not unless you are sure you can settle the credit in 3-6months*