Endowment Policy vs Retirement Annuity ?

[newklear]

With all the talk lately about RA's and Endowment policies on MyBB, wanted to know from someone who knows best what would they recommend? Obviously many factors to consider such as age, money saved monthly, annual salary, expenses etc.

Reason why I ask, I went to go and speak to our Financial Director about a RA, he said it was a waste of my money and should rather look at an Endowment policy not a life policy.

Just hoping someone could shed more light on this and help me understand why he would say that.

Thanks!

 

[FxJalarupa]

http://www.fin24.com/Savings/Get-Saving/All-about-endowments-20140713

Endowments are generally quiet expensive and they lock you in for 5 years minimum, the money gets paid out net of tax... There are ways to save on costs on endowments by selecting cheaper passive funds... Otherwise I know Discovery offer a free endowment to investors who have a life policy with then and are engaged in Vitality... Which is pretty awesome as the investment is literally free for 10 years... (provided the life policy stays in force)

RA only gets paid in retirement after 55 but has wonderful tax benefits before retirement...

If you marry an RA with a TFSA then you can reduce your income tax in retirement also add both are life time savings plans...

Choose your provider carefully and watch out for advisors who will cheat you on commissions...

At the end of the day it's a question of duration... How long do you want to save and what kind of tax benefit do you want as both offer attractive tax structures for higher end tax payers...

 

[Hendrix]

Something else to remember, an endowment only makes sense if your marginal tax rate is over 30%, as an endowment is taxed within at 30%.

If you below 30%, look elsewhere