|
Digital News Report – A recent reader asked a question concerning Life Insurance. Is it a good investment? The person had a whole life policy that pays off when they turn 95 and was wondering if they should convert it to an annuity.
Eric Hu of Gryphon Asset Management in Bridgewater, said that while an annuity has many of the same characteristics as an insurance policy, it is different. Typically the insurance portion of the annuity is geared “towards protecting the growth portion of the annuity or guaranteeing the stream of income when the annuity is ‘annuitized,”
Jacquelyn Jeanty with eHow says that annuities are a great way to save for retirement or a child’s education because the tax is deferred and your money “holds during the investment period.”
There are several different types of annuities. It is basically a contract or agreement usually made through an insurance or investment company. You can receive a fixed payment for a specified period of time.
The bottom line is that only the person buying the insurance knows the reason for the purchase, according to Shelley Parish Nord of Insight Financial Services in Flemington. If things have changed then maybe a person should consider an annuity instead of insurance.
She says the need to convert an insurance policy to annuity should be based on need for money and “current cash flow versus your desire to leave a legacy.”
By: Tina Brown
|
