Life & Health Insurance/life insurance claim
My sister and I just lost our dad and we are expecting life insurance 50 k policy. I want to know best way to get my 25000. Is it best to get it in one lump sum or in an interest bearing account? which way will earn me the best interest? Pleae advise on my options ty
The best answer depends on whether you are more interested in accessibility or best rate of return, and whether you are interested in safety.
Personally, I prefer that there be no risk of loss of principal. So, that eliminates mutual funds and variable annuities. Below I am listing your options, along with their charateristics:
1. bank checking account: greatest accessibility, no interest;
2. passbook account: next greatest, less than 1% interest;
3. bank Certificate of Deposit, less than 2%,
4. traditional Fixed Annuities, current yield approximately 2.5%, but access limited in early years and subject to Federal premature distribution penalties;
5. newer Fixed Indexed Annuities, gained determined by upward movement of various stock market indeces (S&P 500, DJIA, Russell 2000, NASDAQ), potentially greater yield than the traditional Fixed Annuities, but there is no certainty of gain, only guarantee of no loss of principal.
The annuities have the advantage of deferral of taxation of the interest until withdrawn.
$25,000 is not a lot of money, and the temptation is to blow it. I don't think your Dad would have hoped that you would do that. I suggest that you put $5,000 in your checking account for immediate availability. Beyond that, use your best judgment based on the above information.
For more information on life insurance and savings, e-mail me at firstname.lastname@example.org for a copy of 'Life Insurance and Retirement - the Unvarnished Truth.'
Willard R. Brumbaugh, LUTCF
CA License 0374776