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|Subject: Pru VA High 5 closing this week||Date: 2/9/2013 4:59 PM|
|Author: heckunit||Number: 71366 of 74001|
According to our FA, the Prudential Highest Daily Lifetime Income Annuity with the 5% guarantee is closing out this week.
He feels it is a good investment for the following reasons.
1. If they are suddenly closing it out, they are worried about losing money on it. If they are losing money, we might actually have a higher likelyhood of making money off of it.
2. As a proxy for Long term care - it will switch to a 10% payout if you cannot care for yourself for 120 days.
However, I noted that you have to annuitize the account and have 3 years taking payments before you can use this. So basically, it seems to me that you either have to know that you will need the care three years down the line, or just go for annuitizing after the 12 years to see if you live long enough to get value out of this. The account is guaranteed to double in 12 years for annuitization purposes.
3. It can be used as an estate planning device. Death Benefit locks in at the highest daily point your initial investment hits until you take the benefit or start taking payments.
This seems like a fairly good thing and reason not to annuitize.
If the market just continues to go up, we transfer over the money via a hopefully non-taxable death benefit
If the market goes down, we still transfer over the highest our initial investments hit.
Problem? Comes back to the drag fees might have on the investments.
4. Similar to bonds, real estate, etc. it would add a piece of stability should things go south in the world markets. Assuming Prudential survives.
We currently have an allocation of 37% stocks, 8% bonds, 1% cash, 29% real estate, 8% retirement savings (outside of pensions), and a chunk we are pondering that just came in of about 16% in liquid assets (read inheritance here).
So, the questions. How good of an investment is this in terms of a stability piece. At best, we would put 8% of assets in. Or we could buy another piece of real estate, or bonds, or traditional life insurance.
The annuity is so complex it has taken me a couple of days to just work through it, but I do take the FA point about Prudential closing it out. Just trying to put our retirement planning together
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