Questions on Life Annuity

Q: What is the monthly payment for $400,000 to buy an annuity, with capital refund and without capital refund?

Some typical rates can be obtained here.

Q: Does the medical history affect the payout under an annuity?

The insurance company assume that all annuitants are in good health and have a longer lifespan. You should buy a life annuity only if you are of fairly good health.

If you are in poor health, you should not buy a life annuity, as you are likely to receive the payout over a shorter lifespan.

Q: Is there any difference due to timing?

If you buy a non-participating annuity, the payout that you get may vary according to the prevailing interest rate at the time of purchase.

For a participating annuity, the payout is likely to be the same, as the investment yield will be reflected in the bonus payable on the annuity.

Q: Why does a male get a higher payout from an annuity, compared to a female?

A female annuitant has a longer lifespan, and will receive a lower payout, compared to a male annuitant.

Q: I give $500 to my parents monthly. Is there a better way to stretch my money for my parents?

If you have a capital sum, you can buy a fixed term or life annuity for your parent. It may offer you a better return, compared to short term interest rate.

Q: Is it better to buy an annuity at 55 or at 65?

It depends on your personal needs. If you buy the annuity at 55, you will get a lower payout as the annuity will be paid for a longer period. If you wait until 65, you get a higher payout.