by clipup2000 » Wed Mar 23, 2016 03:44 pm
I'm 92. Don't need insurance nor do my children at my death. This is an old policy for $50,000 worth $43000 cash surrender. I need the money and IRA's will be gone this year. I have no spouse living. I need about $13,000 plus SS a year from here on. Health is good at this time but who knows?
Posted: Thu Mar 24, 2016 06:58 am Post Subject:
DId you have a question? Your $43,000 might provide about $3,500-$5,000/year in income from an annuity. But you must act quickly because most companies stop writing new annuities for persons over 92-94 years of age.
You should not cash out the life insurance if you are thinking about the possibility of lifetime income from an annuity, but use a "1035 Exchange" to avoid tax on any gains that exist in the life policy cash value. The income from the annuity will be taxable to the extent the $43,000 exceeds your cost basis in the life insurance policy. For example, if your cost basis (premium paid) in the life policy is $30,000, your gain is $13,000. If the insurance company says it will pay you $4,000 per year based on life expectancy of 9.5 years, you would receive about $38,000 in that time period. 30000 / 38000 = 78.9%, which means that about $3,150 would be excluded from taxation and only about $850 per year would be taxable as income.
FInd a reputable local independent agent to assist you with this. Stay away from most of the "brand name" insurance agencies, whose "captive" agents will not be able to provide you with a wide range of products from which to choose.
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