Sorry if I didn’t find a previous thread on my question.
The setup: I have a friend who’s dad had a stroke at 75 or so. He, and his wife, live on his pension +SS(total=about $2500/month) and his wife of same age gets $600/month SS.
A financial planner is trying to move some of their money into an annuity which can’t be taken by the nursing home, if that’s where he has to go in the near future.
My questions: Are some annuities attachable by nursing homes, and some aren’t? Or is the guy just trying to sell them an annuity, on which he makes a good commission? I just hate the word annuity, as they aren’t vehicles for most people.
I’d love to hear the advice of someone in the industry, who doesn’t mind sharing the Straight Dope on this issue.
I don’t know enough to say whether this is a good or bad recommendation. What the planner is likely proposing is an immediate annuity. Avid investors usually have negative associations with variable annuities which are a completely different animal. Variable annuities are like mutual fund investments with much higher fees in exchange for minimal insurance protection.
Immediate annuities are getting more respect from the financial community, including such low cost stalwarts as Vanguard. With an immediate annuity you exchange a lump sum of money for a promise of a payment, usually monthly, until you die. So, for example, a couple may decide to invest $100,000 at retirement. The insurance company would then promise to pay a set amount, for example, $600 per month as long as one of the spouses is alive.
The planner may be right, it would be difficult for the nursing home to attach the annuity as it promises a set amount monthly or annually. The lump sum has been converted to future payments. It amounts to a numbers game. Someone who lives longer than the life expectancy tables would indicate gets more money from the insurance company. If you die early the money is generally gone. Hope that helps.