I am 65 and my wife is 59, we are planning to work until I am 70-72, and I plan to withdraw social security at 70. We have retirement savings of roughly $2,000,000 of which $1,600,000 is in mutual funds (mostly index funds) and $400,000 in TIAA guaranteed. We have also $400,000 of mutual funds in non retirement accounts and $650,000 in cash. Our current annual gross income is roughly $350,000-380,000. I have a term life policy of $750,000 and my wife has a term life policy of $250,000. We have a rental property that generates a net profit of $17000 per year. We have a total mortgage of $800,000 (split almost evenly) on our home and rental property at rates of %3.25 and $3.75. The $650,000 in cash is kept to invest if opportunities come (another rental property, or a low in the market).
Recently I have been approached by a TIAA representative that urges me to use my cash to purchase a "new" product that they offer. This is actually a whole life insurance that we pay $400,000 at the beginning and add $75,000 each year. The interest is %1.7 and the payoff upon death of "both of us" will be in excess of $1,000,000 during the first year and will increase to over $2,000,000. He says that we can withdraw our money at any time and the payoff will be changed accordingly, so our cash will be quite liquid with an interest of %1.7. Another benefit, according to him, is that the payoffs are tax free. The downside is that if we withdraw during the first year, the insurance will be cancelled. I was wondering if this is a good offer or not? It is advisable to go with this or put the cash in a balanced fund (I am thinking of Vanguard Wellington), or maybe use the cash to payoff my mortgages (although the rates on mortgages is really low).