Tuesday, October 02, 2007

Life annuity with no refund

Many people think that it is better to buy a life annuity that provides a refund. They were not aware that there is a cost to the refund. An annuity with a refund can pay out 10% to 20% less in payout, for a given invested sum.

An annuitant who bought a "with refund" annuity previously asked me if it is possible to convert to a "no refund" annuity. She has no dependents and wish to have a higher payout.

I expect, in the future, more people to opt for the "no refund" annuity.

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