John Bogle Urges Retirees to Ignore Bequest Motive
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The term bequest motive refers to the incentives behind the desire for a person or persons to pass along their assets when they pass away to heirs such as children or other family members. The bequest motive is important to understand in the context of annuities because certain types of annuities tie-up assets and prevent the contract owner from passing along or “bequeathing” those assets to their heirs.
Submitted by tom on
This discussion thread is a continuation of a frequently asked question that can be found here: http://www.annuitydigest.com/faq/what-happens-if-i-die-5-years-9-year-annuity-can-my-heirs-still-receive-principal
The question is as follows: "What happens if I die 5 years into a 9 year annuity? Can my heirs still receive the principal?"
The question basically deals with the issues of revocability and bequest motive--both of which are large issues when it comes to annuities.
The short answer is that there are many products and product options that effectively address revocability and bequest motives.
Henry "Bud" Hebeler is a former Boeing executive who has been running a retirement planning...