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ResN writes,

Just so you know, you aren't getting a 4-5% annual return on these annuities. You're getting a payout of 4-5%, which includes principal, which by the way would no longer belong to your parents. The insurance company gets the principal, and your parents get a payout based on 4-5% of the original amount less fees, commissions, and a mortality premium, plus their money vanishes at death.


That's true for any kind of Life Annuity, but insurance companies also sell Period Certain annuities (e.g., ten $10,000 annual payments for a $94,000 up-front premium) Of course, the insurance company could go under before you collect the last payment.

Right now you can get 4% on a term of 10 to 12 years -- about what you'd expect from a Corporate bond.

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