Apparently I qualify to buy an annuity as part of a class action settlement. Is it worth it?
I got a notice of settlement in the Douglass et al v. American United Life Insurance Company class action suit
saying that as a class member, I am eligible to buy a tax-deferred AccumAnnuity II
that will accrue interest at 1.25% higher than what's available to the general public. According to this page
, the rate would be 3.7% + 1.25% for year 1, going down from there to 3.35% + 1.25% at year 7. That's certainly better than the 2% I'm getting from a CD or savings account.
So, assuming this is not a scam (I don't think it is), should I do it? I don't have much in savings, but I could probably swing a small amount (like $5k) and still keep a healthy emergency fund. I am in my mid-thirties, healthy, married, no kids. I have less than $15k saved for retirement so far, but I'm maxing out my contribution every year. I save about 20% of my income. Aside from student loans at 6% interest and a mortgage I make 13 payments on every year, I have no debt. I live in Massachusetts, if it matters.
Thanks in advance for any advice.