UL Life insurance cash out- annuity

[wrichards58]

We have a UL life insurance policy for death benefit of 615,000 and our cash value is 217,000. Taxes that we owe is on only 56,000.
We have a loan of 68,000 that we would like to pay off with some of the cash. Our agent is trying to talk us into buy an annuity with the money. What do you guys think of an annuity? Help any thoughts

 

[pb4uski]

Generally not much, particularly variable annuities and to a lesser extent deferred annuities. Immediate annuities are debatable.

The question is why? What is your objective with this money and how does it fit in with the rest of your finances? Do you no longer need the life insurance death benefit?

 

[REWahoo]

Our agent is trying to talk us into buy an annuity with the money. What do you guys think...

I think your agent is trying to figure out a way to make a fat commission off you, just like he did when he sold you the life insurance policy.

A Single Premium Immediate Annuity (SPIA) might be appropriate under some circumstances once you are retired, but as pb4 mentioned, the other types of annuities are not. Insurance companies make them sound really good, and they are - for the company and the agent.

 

[frayne]

I think your agent is trying to figure out a way to make a fat commission off you, just like he did when he sold you the life insurance policy.

Bingo, give that man a cigar.

 

[FinanceDude]

So, your agent wants you to pull money out of a UL, pay taxes on it, and then "reinvest" it into an annuity? Uh, no..........

 

[wrichards58]

So, your agent wants you to pull money out of a UL, pay taxes on it, and then "reinvest" it into an annuity? Uh, no..........

no a roll over so we would not pay taxes....I think that we have figured out that if we max out the 403b and the ira...we could cash out and they in the same tax bracket...yes, pay taxes on the 56000.... I think that the annunity is not a good choice...I called Vanguard and they asked why put the money into an annunity

 

[REWahoo]

I called Vanguard and they asked why put the money into an annunity

They've obviously been reading this thread...

 

[frayne]

They've obviously been reading this thread...

 

[Independent]

If the plan is to convert the cash value into income (i.e. to buy a SPIA), then you should look into the option of using the cash value to fund a "settlement option" that is an annuity which doesn't necessarily pay commissions to the agent.

Look at the contract, there will often be a table of monthly rates. If those rates were guaranteed some years ago when the contract was issued and interest rates were higher than today, they might be better than what you'd get on a new SPIA.

 

[mickeyd]

Our agent is trying to talk us into buy an annuity with the money. What do you guys think of an annuity? Help any thoughts

Your agent sounds like a nice guy. Why not convert the LI to an annuity and help his family achieve their financial goals?

 

[wrichards58]

Your agent sounds like a nice guy. Why not convert the LI to an annuity and help his family achieve their financial goals?

Not going to do it....my husband employer set up the policy not really for the death benefit but just for the cash value...........we are checking with our tax guy in hopes that we can cash out of the policy this year....I do not trust insurance salesmen............ my benefit 403 guy is the same....when we were talking about options and he brought up the next step ira rollover and said that the expense ratio are not an issue....that gave me the flag. He was talking about the ratio in hiis ira was mostly 1.50 and higher..I looked at them and the ROR was not that great.......again.......I do not trust them. I trust forum people more. So thanks for all the help that you guys have given me. My next step is to understand the tax issue in retirement more and learn the mutual fund and investment part..........thanks again