I don't understand this "logic." Am I getting surrounded by insurance sales agents here again, who happen not to represent NTUC Income, Tokio Marine, or Manulife but somebody else who doesn't offer a life annuity?
"Entire life" is not age 99. Let's not assume.
OK, so if this is a double joint/survivor annuity as you've described it, then it's going to be quite expensive. But it's very weirdly constructed if you've described it accurately. That would be one hell of a bad 99th birthday, because you've just cut off your child from a lifetime annuity. This sounds like a terrific policy if you want your child (or grandchild) to push your wheelchair into oncoming traffic during your 98th year of life.
That's a start, but the policy document itself is controlling. Got a copy of that?
Right, but with an extremely powerful financial motivation to kill the policyholder in his/her 98th year of life, if it's actually constructed this way. They really ought to call it the "Signature on Your Death Warrant in your 98th Year" plan, and I'm only half joking. If the policyholder survives and celebrates his/her 99th birthday, the whole deal collapses into a puddle of zero. If what is being described is accurate.Tangent314 said:
You're the one so gung-ho about this particular insurance policy. I'm not sure why.
Fabulous. "Transfer the policy to me now, or else"? WTF?
That cannot be correct, unless age 99 is a mandatory transfer date. And even if it is correct, it's a very expensive policy to buy.
No, there's a lot bad with it. Most importantly, it's an over-purchase of insurance, and that's expensive and wasteful.
Nothing requiring it either.
That's disparaging?
OK, but that only goes so far, which is not far. The policy document/wording would be illuminating, and it'd be nice to see it.
Age 62 is the earliest payout age you're allowed if you're buying an annuity with SRS funds. But just be a little careful about that, because it's at least possible you'll have other taxable income in your early 60s. Income tax will be owed on half the payment at ordinary rates. So, for example, if you get $10,000/year from the annuity (let's suppose), and you have $60,000/year of income in that first year, then you'll pay ordinary income tax on $5,000, or (it looks like) $350 in income tax (7% bracket). Not the end of the world, of course, but the point of SRS is to try to minimize tax.
Actually, only single premium life annuities are fully SRS qualified. However, you could purchase more than one single premium life annuity with SRS funds -- that's allowed. For example, you might have one life annuity start at age 62 (which NTUC's Guaranteed Life Annuity can do) and another start at age 70 (which Manulife RetireReady Plus can do). You might do that in order to simulate an inflation-related escalation (roughly) and to avoid a potential tax hit if too much income (from SRS-purchased annuities) is paid too soon. That is, you could still owe some income tax on these payouts, if you have other taxable income. You're more likely to have other taxable income at age 62 to 69 than 70+. Many people have a "soft" retirement, where they still earn some income from work.
Fully SRS qualified life annuities are genuine longevity insurance. And, for those who can save significantly on their taxes and who end up with “big” SRS accounts, they can make financially sense....
