An Annuity’s Taxable Portion Explained

Often my clients, who buy non-registered life annuities, ask me to explain why the lowest premium on a quote table attracts a less taxable portion than the highest premium.

And now I have a definitive answer (I hope).

The greater the capital you invest into such a life annuity, the greater the return of capital you will receive in each life annuity payment. Thus the taxable portion of each payment is lower!