Manulife Signature Income (II)
Exploring this as a legacy planning tool + income instead of just pure legacy planning tool in the form of a UL where we wouldn't be able to use the money.
So buying it in the kids name, so for as long as we are around, we will get the payout and when we pass on the kids will will continue to receive the payout during the lifetime.
Looking at using premium financing for this.
Conventional wisdom seems to suggest that this is a decent plan given that it provides a constant stream of income for as long as the kid is around and is capital guaranteed.
Yes acknowledged. that doing DCA into World Index Fund might get higher returns and cheap etc, but considering that has been taken care of, but still got some idle cash sitting around. Any reason why this might not be a good idea?
Based on current premium financing rate, the guaranteed portion of the payout is more than sufficient to cover the interest payout hence it is almost like self financing. Even when interest rate goes up, interest rate has to hit like around 2.15% for the guaranteed payout = interest payment.
yes the non-guaranteed is in its name non-guaranteed. but what I understand is insurer will almost always pay it based on 4.75% due to bonus smoothing. so the returns can be as high as 11+%
The only time it will not be self funding is when interest rate goes up to like 5.75% or if the payout cannot be made at the 4.75% project returns. in either case, i recognised that it can happen, though chances of it happening may not be that likely anytime soon. That being said, will still have funds ready to pay off the principle if that ever happens. but thinking of leveraging to get higher returns.
Sounds no different from buying an investment property for rental income, but stream of income is more constant.
