Tuesday, August 21, 2007

Capital protection for Life annuity

Hi Mr Tan,

I read your article in the Straits Times concerning Annuities. I have a question concerning longevity risk. If I were to take up an Annuity of $100K at the age of 62 but I die 5 years later. Does that mean my wife and children won't get back $100K?

REPLY:

If you buy a capital protected annuity, your family will get back the amount invested, less the payments that you have received.

A capital protected annuity pays about 12% less than a pure annuity (ie without capital protection).

Read this article.

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