Invest in a life annuity - Options

Dear Mr Tan,

Your article on Reward of Buying a Life Annuity at 65 published in the Straits Times on 24 September was very well and clearly written. It is very easy for a layman to understand. Thanks a lot for taking the effort to write the article.

I had been approached by at least two NTUC Income agents on this type of annuity but I didn't see any benefit in it as the monthly payout is very low.

Is it possible to put in a higher amount and get a higher monthly payout? I understand that there is a maximum amount that we can put in, is this true?

Can I convert my Living policy into an annuity at age 65 and also invest my minimum sum in an annuity. Can I receive two payouts from two annuity policies?

MY REPLY:

You can invest a larger sum. There is no limit to the amount of investment. The payout will be proportionate to the amount invested.

The commercial terms may be different from the example that I used for educational purpose. Do study them before you decide to buy the annuity.

It is better to keep the CPF Minimum Sum in the retirement account in the CPF until you are age 65, to enjoy the higher interest rate payable by the CPF. You can decide to buy the life annuity at that time, depending on the commercial terms available then.

If you buy two annuities, you can get two payouts. There is no restriction.