Annuity plan

[BBCWatcher]

She has about $5 million asset. The value of this one condo is less than 50% of her total asset, meaning her real lifestyle will not diminish after 20 years as she has other assets to liquidate to sustain her for life.

Then what purpose would a fixed term annuity serve that a simple portfolio of high quality bonds (or a high quality bond fund) wouldn't serve at least as well?

I tend to believe that insurers are smart with actuarial science behind them. If one wants leveled amount, one will get higher monthly $A overall total $X, and if one want escalating amount, one will get lower $B but overall still total $X. Ideally is to be able to have the whole cake and eat it.

Uh, yeah, but why are you asking for a 20 year term fixed nominal payout annuity specifically for this dear lady? How is that specific instrument going to help her achieve her life goals? For example, has her delinquent son just fathered a child, and she wants to pay court-ordered child support for her new grandchild equal to $X/year for the next 20 years?

Come on, this isn't a hard question! I'm asking basic stuff here. What's the real life scenario she's trying to solve for? You mentioned a nursing home scenario, but a 20 year term fixed nominal payout annuity is not at all well suited to supporting that scenario.

 

[mummynew]

Then what purpose would a fixed term annuity serve that a simple portfolio of high quality bonds (or a high quality bond fund) wouldn't serve at least as well?

It must ideally be an as fuss free as possible long term investment product for her (or most of my friends). These women not interested in managing any portfolio, regardless of how simple it is. You have to accept that there are many such 'stupid' people around.

If the property can be sold for $2 million and she put 75% of it into annuity plans (with different insurers with different drawdown dates etc), she can start to enjoy her full $2 million wef drawdown dates instead of just enjoying whatever annual dividends received or have to systematically go and sell 4-5% of the bonds annually to get the desired income.

Uh, yeah, but why are you asking for a 20 year term fixed nominal payout annuity specifically for this dear lady? How is that specific instrument going to help her achieve her life goals? For example, has her delinquent son just fathered a child, and she wants to pay court-ordered child support for her new grandchild equal to $X/year for the next 20 years?

Come on, this isn't a hard question! I'm asking basic stuff here. What's the real life scenario she's trying to solve for? You mentioned a nursing home scenario, but a 20 year term fixed nominal payout annuity is not at all well suited to supporting that scenario.

Since when did I ask for 20 years term fixed? I asked for annuity products and the TS replied with 20 years term (common type) and I can just estimate the numbers along with it. A 15 years term may even be more suitable for her case as after 15 years, she will be 75 years old and the years are really running short for her to spend most her remaining about $3 million. 15 years = higher monthly payout and she could retire beautifully by going for Iceland cruises etc for months without having to worry about a thing. (btw, both her parents died in their 70s).

For people with a lot of excess wealth relative to expenditure, it is never necessary to try to maximise returns anymore. If able to optimise it is good enough.

 

[mummynew]

I dun mind paying, eg. I bought whole life insurance when young, now it is compounding at 4-5% pa , I dun need the insurance component anymore, so continuing with it as an "investment". No cost, only upside, no downside.

Now there are so many people willing to pay a fee, not for whole life policies, but for robo portfolios. Cost plus potential downside should market dive

Next May one of my 24 years endowment plans will be maturing. Will share the numbers when I collect the cheque (at about 6+% IRR, exceeding expectations).

 

[mummynew]

But another 1 with yearly income guaranteed $59400 start age 65 and premium pay 5 year is $183528.20, @4.75% is $61479. Dont have payout start 60

If base on same $5950/month but tm is yearly $71400
Premium is $220604.60/year for 5 years ($1103023 total)
@4.75% $73899

The ideal product should be single premium and start drawdown 5 years later. 5-Pay is not suitable as the drawdown likely to be 10 years later from first premium payment (a bit too late to enjoy the fruits fully).

TM doesn't have single premium plan anymore?

 

[maple96]

It must ideally be a as fuss free as possible long term investment product for her (or most of my friends). These women not interested in managing any portfolio, regardless of how simple it is. You have to accept that there are many such 'stupid' people around.



For people with a lot of excess wealth relative to expenditure, it is never necessary to try to maximise returns anymore. If able to optimise it is good enough.

Agree, I have similar views.

It is also part of my estate planning process, to "simplify" my assets for my own and estate to manage simply and cost effectively, no need for lawyers if possible

 

[boredboiboi]

Next May one of my 24 years endowment plans will be maturing. Will share the numbers when I collect the cheque (at about 6+% IRR, exceeding expectations).

That high. What plan is it?

 

[maple96]

That high. What plan is it?

most of such good products are extinct! Insurers are quick to pullout such products

 

[boredboiboi]

Agree, I have similar views.

It is also part of my estate planning process, to "simplify" my assets for my own and estate to manage simply and cost effectively, no need for lawyers if possible

Chill. Its me who generate and share on 20 years income.

 

[boredboiboi]

most of such good products are extinct! Insurers are quick to pullout such products

True also. But its a 24 years plan.

 

[maple96]

Chill. Its me who generate and share on 20 years income.

I am not referring to your work, dun over react

I amended my post to remove what she wrote about u

 

[boredboiboi]

The ideal product should be single premium and start drawdown 5 years later. 5-Pay is not suitable as the drawdown likely to be 10 years later from first premium payment (a bit too late to enjoy the fruits fully).

TM doesn't have single premium plan anymore?

They have but due to the age, single premium earliest payout is age 70 for TM. And due to accumulation period as u mention, not many insurer able to start payout for age 55 to start age 60.

 

[maple96]

True also. But its a 24 years plan.

U shld know, the longer the better the returns. I bought a 15 year plan, the return is higher than 11 year plan.

A 11 year plan is higher than a 10 year plan, so buy 11 year, why buy 10 years.

My friend bought a 20 year plan, matured more than 5% pa compounded!

 

[boredboiboi]

U shld know, the longer the better the returns. I bought a 15 year plan, the return is higher than 11 year plan.

A 11 year plan is higher than a 10 year plan, so buy 11 year, why buy 10 years.

Yes correct, the new endownment i saw if more that 20 years, if @4.75% only 3.9% accumulate calculated

 

[boredboiboi]

The ideal product should be single premium and start drawdown 5 years later. 5-Pay is not suitable as the drawdown likely to be 10 years later from first premium payment (a bit too late to enjoy the fruits fully).

TM doesn't have single premium plan anymore?

Tm single premium earliest is 70 for anb 56. For anb 55 earliest is 65.
Company M premium $1005668.55
Guaranteed monthly income of $6350 for 15 years. From age 60
@3.25% - $6655.25/month
@4.75% - $7918.64/month

Anyway company M has the flexibility to change the payout period 2 years prior to the payout start. Meaning now 15 years payout can change to 10 years payout or 20 years payout.

Company Av
Premium $1003008
Earlier payout is age 61
Guaranteed and fix $6530/month for 15 years and a maturity bonus at age 76
Maturity bonus @3% $196844
@4.5% $519003

Company A
Age 60 start for 15 years income
Guaranteed monthly $6300
Premium $1008000
@4.75% $7486.5
@3.25% $6767.25

 

[BBCWatcher]

A 15 years term may even be more suitable for her case as after 15 years, she will be 75 years old and the years are really running short for her to spend most her remaining about $3 million.

Wait a minute. You were the one with the nursing home scenario. How does a fixed nominal payout annuity with a 15 year payout term solve that?

For people with a lot of excess wealth relative to expenditure, it is never necessary to try to maximise returns anymore. If able to optimise it is good enough.

I agree! So what on earth is wrong with a high quality insurer guaranteed lifetime escalating income stream for her? She enjoys her fabulous cruises and high quality nursing home care for as long as she needs it, if and whenever she needs it.

 

[maumu]

is it true annuity plan can help to stretch SRS withdrawals beyond the preset 10 years? say if you buy 20 years, you get to withdraw the entire SRS balance + annuity payouts for 20 years with no tax? (assuming yearly combined withdrawal is still less than $20,000).

 

[BBCWatcher]

is it true annuity plan can help to stretch SRS withdrawals beyond the preset 10 years? say if you buy 20 years, you get to withdraw the entire SRS balance + annuity payouts for 20 years with no tax? (assuming yearly combined withdrawal is still less than $20,000).

Yes, it’s true with one annuity: Manulife’s single premium life annuity. And it’s up to $40,000 per year of annuity payouts since 50% is taxable. Only life annuities can be fully SRS qualified, and that’s currently the only one that is.

 

[Goesaround]

Pm me quote anb 37 non smoker male . Pay 10 or 15 years payout start age 55 for 20 years. Monthly guaranteed $500/month. Thanks in advanced

 

[boredboiboi]

Pm me quote anb 37 non smoker male . Pay 10 or 15 years payout start age 55 for 20 years. Monthly guaranteed $500/month. Thanks in advanced

Pm you already

 

[Goesaround]

Pm you already

Seen. Thanks. Looks like company M overall is good against a few others.