Whole Life vs annuity plan? Anything we are missing out/not considering here?

Whole Life insurance vs annuity plan? My dad (63yo) currently has a whole life plan that he's still contributing to every month. Recently he got approached to convert the WL to an annuity plan paying out $500/mth from 70yrs. Selling point being 1) the mthly payout will help out for mthly expenses during retirement, and 2)whole life coverage isnt that important relatively, as my bro and can fend for ourselves in the future. Anything we are missing out/not considering here in this decision?

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Loh Tat Tian

14 May 2019

Founder at PolicyWoke (We Buy Insurance Policies)

That;s a fantastic way to look at the whole life and conversion to annuity. But before he do that, best to do IRR calculation (internal rate of returns) based off CPF Retirement Sum Scheme of average 4% to 6% returns.

If its CPF life, you may wish to consider other type of vehicles that can give somewhat dividend returns, or structure in a way that you can contribute into his RA (while he draws out some), since you will see the money.

An annuity normally only has about 3%, which may not be a good wealth preservation in this case.

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Luke Ho

09 May 2019

Founder and Director at CFX Money Maverick Pte Ltd

Not really. It's a good offer, I would take it.

I AM a professional, so typically I'd go over the documents carefully to see if there's anything I missed out. Terms and conditions are not to be underestimated. Subjective experiences such as 'fending for yourself' should be assessed quantitatively as well.

Not to be taken as formal advice, but if that were all the info provided, I'd take it.

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