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Greetings, Joe, and welcome. You worte:

<<My 92 year old Father-in-Law has a CD which is about to mature. He has been rolling this over for many years and it has grown to a substantial amount. His bank wants him to convert this to a Fixed Annuity.

I am skeptical of this move for several reasons. This particular Annuity has an exit fee that starts at 10% the first year and decreases 1% over the next 9 years.
That would make him 102 before he could take a withdrawal without a penalty.

HIs pension and interest on his other investments more than cover his daily living expenses and he has a large amount invested is several Mutual Funds.

The only reason he may have a need for the money in the CD is to pay for an extended stay in a Nursing Home. He does not have Long Term Health Care Ins.

His bank has served him well over the years and I am wondering if I am missing something on this.>>

I certainly don't know all the details surrounding the offer made to your FIL concerning this "investment," but at his age an annuity seems almost certainly totally inappropriate. Have him ask who will get the proceeds of that annuity should he die shortly after taking it? Unless almost all will go to his heirs, then the only one who will benefit from his purchase will be the insurance company (who doesn't have to pay out the principal invested at death) and the agent selling the policy (who at a bank is probably drawing a hefty commission for its sale). In fact, I'm pretty much appalled that anyone suggested this product to him. I, too, suspect ulterior motives are at work. Still, giving the agent the benefit of the doubt, I don't know all the details of your FIL's situation.

For more on annuities, see my articles at

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