Why Life Insurance Agents Get A Bad Reputation

Individual, 77 years old, widow, one grown child (in 40s), no grandkids, has approx 150k in a nonqualified annuity. The contract annuitizes at Age 78. Has roughly 50K paid into the contract.

Individual also has a small pension from deceased husband, SSA, and some investments accounts.

Life Insurance rep wants to take 15K out of the annuity each year, and use it to buy Universal Life. Rep told her by doing this, she would not have to pay tax on the 15K drawn out of the annuity each year. (This is incorrect, by the way - she has to pay tax on a portion of that annuity payment just like normal).

Rep showed a projected illustration. Roughly 300K in death benefit. Premiums projected to be required until Age 100 - probably well after the annuity would be exhausted. Policy builds a small amount of cash value - up to $9,000 in year 5, then cash value drops until year 9, where it goes to zero, and stays at zero for remainder of term.

I plan to enjoy the Money Talk's discussion of this situation. =)