Buy an immediate life annuity with $200,000

Dear Mr Tan,

I like to buy a Life Annuity without refund from NTUC Income with my hard cash of $200,000. I am single without dependent and wish to have a higher payment monthly.

May I find out from you what will be my monthly payout? I need this monthly sum to tie over my personal expenses, household bill and HDB loan. I do not intend to put this $200,000 in fixed desposit or do investment which I am not familiar.

Moreover, I am quite a generous and spendthrift person. I am afraid one day all my savings will be parted due to poor financial planning.

I approached an agent from NTUC Income in Aug 2007. She told me that there is no such Life Annuity without refund in NTUC Income. She offered me the Guaranteed Life Annuity (immediate cash). However, this is not what I want. Hence, I did not commit it.

Fortunately, I read your article on The Straits Times dated 24 Sep 07 and is very pleased that you have offered your advices for us to seek help and clarification.

I know you are a very reliable and reputable ex-CEO of NTUC Income. I trust you will help me to check and let me know how much I will get from NTUC Income per month pay-out (Life Annuity without refund) if I cash in my $200,000.

MY REPLY:

As NTUC Income does not offer a "no refund" annuity, the next best option is to buy a Guaranteed Life annuity with a 5 or 10 year guarantee.

I will ask the manager of the business center, to contact you and advise the payout for this annuity.

It is a participating annuity which gives you a bonus each year (the rate of bonus is not guaranteed) and it will enhance your monthly payment.

You can start the annuity at your current age while you are still working part time. If you do not spend all of the money, you can save it in a bank account.