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>>I tried it on my little financial calculator which sometimes works. I used a present value of $200,000, an annual payment of $14,000 (7% of the principal), a time period of 25 years with a future value of 0. This came out to be an interest rate of 4.86%. Sort of like a 25 year reverse mortgage. Might be an ok deal in some instances but not for me. I believe a real 7% might start to get my interest. 5% on a FDIC insured CD would be better but then the time frame becomes a problem as it is with the annuity.<<

As does the flexibility. If you still have the lump sum, it could do something else for you. Sure, you'd pay penalties if you took it out of CDs early, but if you have a real emergency, you hardly care about that.

I was pretty sure that if I suggested this, someone would do the PVA math and see just what this annuity is really worth. And that assumes that the 7% is net of fees and hidden costs, too. Assuming that an insurance company fails to tack on fees and hidden costs is like assuming cocaine is uncut just because a drug dealer says so.
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