Annuities
An annuity is a contract between the Insurance Company and the Annuitant where in exchange for a premium payment, an individual will receive regular payments for life or for a set period depending on the type of annuity purchased. An annuity can be a great way to maximize your retirement income and receive a regular stream of income. The main benefit of an annuity is that you don’t have to pay taxes on the interest you earn until you begin making withdrawals.
An annuity will guarantee you fixed income on a monthly basis. Choosing an annuity doesn’t require any investment decisions and removes the stress and worries that are associated with these decisions. The income payments you receive are derived from principal and interest. An annuity can be purchased with Registered Funds from an RRSP, Locked in RRSP’s, Pension Plans or Deferred Profit Sharing Plans, or Non Registered Funds/Plans.
Different types of Annuities
Life Annuities: A life annuity provides you with income for as long as you remain alive. Many options are available and can be purchased as a single or a joint annuity with your spouse.
Term Certain or Fixed Term Annuities: Provides income until the end of the term selected. This term can be any time period you select but must be a minimum of 5yrs. This type of annuity does not guarantee an income beyond the age of 90. If the annuitant dies before receiving all of the payments guaranteed to them, the payments will continue to be paid out to the spouse or one or more of the beneficiaries. For non-registered funds used, the number of income payments can be extended beyond the age of 90.