Annuity for a Child

[scagnt83]

Most IUL carriers and most decent WL carriers have a Premium Deposit Account. So you can always do a single pay and avoid a MEC.

You can also design most any IUL or UL to be a 7/10/15 pay etc.


Or you could just do a Mass 10pay. You can use a Premium Deposit Account with it too..

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Another option would be Market Linked CDs.

Or you could invest it in a basket of AAAs or a decent bond fund. It would certainly outpace a Tnote and give you very minimal risk.

 

[axeman462]

Most IUL carriers and most decent WL carriers have a Premium Deposit Account. So you can always do a single pay and avoid a MEC.

You can also design most any IUL or UL to be a 7/10/15 pay etc.


Or you could just do a Mass 10pay. You can use a Premium Deposit Account with it too..

----------

Another option would be Market Linked CDs.

Or you could invest it in a basket of AAAs or a decent bond fund. It would certainly outpace a Tnote and give you very minimal risk.

what is a market linked CD? never heard of this. Any companies you would reccomend for one?

 

[DHK]

They're called Indexed CDs. They're like indexed annuities, but they're CDs.

They have caps and participation rates, but the interest credited is taxable.

I believe you can buy such CDs through an investment brokerage account.

Indexed CD may mimic market, but rate the risks

 

[Norwayguy]

They're called Indexed CDs. They're like indexed annuities, but they're CDs.

They have caps and participation rates, but the interest credited is taxable.

I believe you can buy such CDs through an investment brokerage account.

Indexed CD may mimic market, but rate the risks

There are also IMOs offering contracts, never sold one since when you weigh the pros and cons the annuity won out but the lack of pre-59 1/2 penalty would work here.

 

[CaseyV]

So I was considering giving my nephew money for Christmas this year, because the kid has basically everything else he could possibly want. My wife and I were playing around with different ideas, 529 plan, Treasury bonds, CDs etc...

I was thinking about an annuity, reason being because it wouldnt limit him to only using it toward education like a 529 plan would (maybe he can use the money to start a business later in life(Or let it grow for retirement)). And the interest yield would be significantly higher than a CD or a T Bond

One reason I was leaning toward an annuity for him is because I vaguely remember during training at Bankers when I was there them mentioning something about a "Uniform Gifts to Minors Act" If I remember right, this makes the 10% tax penalty exempt if the monies are used for education costs?

But anyway, i was thinking starting an annuity over time and talking with his parents about funding it would be a good way to help the kid get a head start in life, and have options with the money (start a business, down payment for a house, or education costs etc..)

Any opinions on the pros or cons for an annuity for a child? Or better ideas?

How old is the kid and how much do you want to put away for him? Annuity or men IUL may be a good fit, even with a 10% penalty on gains for under 59 1/2 distributions. if funds are annuitized during college years say for 5 or 8 yr certain, tax hit is spread out over the years and his income may be minimal so income tax rate no biggie either.

 

[axeman462]

How old is the kid and how much do you want to put away for him? Annuity or men IUL may be a good fit, even with a 10% penalty on gains for under 59 1/2 distributions. if funds are annuitized during college years say for 5 or 8 yr certain, tax hit is spread out over the years and his income may be minimal so income tax rate no biggie either.

Yeah... We ended up getting him model rockets instead...